All Forum Posts by: Ash Patel

@Nick M. - I would call a local realtor or property management company and get the scoop on the place.  You can also use google maps to find some of the neighbors or neighboring businesses and ask them about the property.  That may save you a trip.

@Sumeet C. how much of a newbie are you?  What was it that was too risky?  Did you negotiate the purchase price to reduce the risk?  

I've purchased strip malls with regional tenants and I believe the key is to be very attentive to all of your tenants needs.  With 6 tenants, the risk is spread out.

That is insane!  The excavation should be included in that price.  How many acres is the entire plot?

My last contract was 50% of the earnest money goes to the broker if the deal falls through.

I have tried making my own but its amazing what a professional can do.  Get them professionally printed as well.  

@Account Closed has a great point.  This happened to one of my parent's properties where a hampton announced they were coming to their small town.  Expenses can range from normal maintenance, crazy new ADA requirements, changes in elevator/fire safety requirements, pest control, indoor pool expenses etc.  Every so often the franchise will try to reinvent themselves with a mandatory makeover.  There go your profits for 3 years or that can impact your sale price if you want to sell.  Even though you are in a small town, you need to market to local businesses, churches, chambers etc.  I know the business fairly well and I would want to be onsite.  I would purchase subsequent properties to gain economies of scale but would remain in the business and do other commercial RE part time.  

One bad employee can cause a few bad reviews which can start a downward spiral.

My family has been in the Hotel Business for over 20 years.  I would not plan on remotely running this property.  I have seen experienced owners attempt that same formula and fail miserably.  You may be able to hire a professional hotel management company but if you are in a rural area, that may not be an option.  Hotel's are a relatively easy business to run once the proper staff and systems are in place, but I believe you have to be there to set all of that up.  You will want to ask for a copy of the PIP list asap and get the costs associated with that.

My parents are now able to travel out of the country for several months at a time and their Hotel doesn't skip a beat.  

@Rich Hupper,  Here is how I would handle this deal:  If you can get the seller to hold the note, lock it up under contract with a 45 day contingency period.  Negotiate the best that you can but know that the final number is yet to come.  Discuss your plans with zoning and the building dept.  Tell them the great things you will do with the building and get their feedback.  Have the fire dept do a complete inspection.  Pay for individual trades people to do inspections (Plumber, Electrician, Roofer, Pest Control, HVAC, Structural).  

When you compile the list of deficiencies, back to the negotiating table.  By this time, the seller may be emotionally attached to closing the deal.  Remind them that unless it is an as-is closing, they will have to disclose any major defects with the building.

Buildings from that era are often over engineered, very solid and obviously stood the test of time.  You want to avoid moving or even opening any walls because nothing good will come out of that.  Keep in touch with me, I would be happy to help you through all of the nuances I learned the hard way.  

@Rich Hupper - My first property was mixed use and the first floor commercial was on a long term lease.  I had several bank presidents from smaller banks tell me that they were not interested in financing it.  It could have been that it was in a college town or that it was 120 years old.  These are tough to find comps on, have appraised and find financing.  Explain that to the seller and convince him to carry part of the note.

In my case, value add deals are financed at 70% LTV.

Thanks for the replies.  If the recorder did not accept the document since it wasn't notarized, am I under any obligation to do so to appease the city?  I find it odd that they can require recording this document?