All Forum Posts by: Bob Langworthy

@Jason Turgeon, a lot of good input so far. One other piece to consider is that you would probably have more parking than necessary for the tenants and could lease out parking as an additional income source.

Hope this helps,

@Jason Lieberman, I'd sell it. Here's why:

1) Renting it out is an afterthought, not a plan. You didn't buy a rental property that would produce decent cash flow. You bought a primary residence.

2) The ~$500/month in will get swallowed up by the roof and A/C.

3) You should be able to better than $500/month on $100,000 invested in quality real estate.

Hope this helps,

@Brian Mitchell A few of the great books I read last year that would relate to real estate, investing, mindset, etc. are:

Rich Dad, Poor Dad

Never Split the Difference

The Richest Man in Babylon

The One Thing

Hope this helps,

@Lou LaMedica, the real estate is in a separate single member LLC. I have a 20 year commercial note on it, with a 7 year balloon at 4.375%. And yes, an SBA loan can be used to purchase owner-occupied commercial real estate.

Hope this helps,

I'm doing this with a four-office building and my accounting practice. The other three tenants and the parking pay all of the bills and what I pay is the positive cash flow. Works beautifully. It has also allowed for some tax planning opportunities. Office hacking is the way to go!

Hope this helps,

@Daniel Reyes, thanks for putting this out here. Be sure to comment on 1/1/20 with all of our names so that it will be in our notifications and we can report back on our progress.

Our goals for the year are:

1) My wife will transition out of being an eBay seller and in to real estate. The transition will be slow (we have four kids) and will be primarily education followed by some deal finding.

2) We'll add to the real estate portfolio to produce an additional $1000/month in income.

3) Continue to educate myself through podcasts and books.

4) Be available to answer questions on this platform and through my accounting practice.

Happy new year!

Owner financing. You can create virtually any structure that you want. Your wife's aunt probably wants regular income. For example: if you pay her $300/month for 25 years, she will have a steady stream of income and you would end up paying her $90k, far less than a bank loan. 

Hope this helps,

Welcome, @Zorinne Green! Here's a couple ideas:

1) Find a real estate meetup in your area and attend regularly. It's a great place to meet people at every stage of investing from not owning any property, to owning hundreds of properties, looking to make hard money loans, realtors, contractors, etc.

2) Most mentors aren't looking for a mentee unless they have a paid program. You don't need a paid program right now. But if you want to work with someone, you need to bring them value. What you may see as a negative (being young and inexperienced in real estate) has some positives. You are probably very savvy with social media and your lack of experience allows you to think outside the box. Offer some social media marketing skills for free to an investor and you may have the beginning of a partnership that will also bring benefit for you.

Hope this helps,

@Jeremy A. is right that Craigslist is probably the best source for Topsham data. Currently the one at 49 Winter Street is the highest rent at $1800. It's in a great location, newly renovated so they'll probably get it. 

Hope this helps,

@Stephanie Ferrante, the others have asked some good questions and I would also encourage you to find as many actual figures as you can and to look at current office space availability in your area. Having said that, here are some positives to consider:

1) I did a very similar thing with an empty commercial building in my town. It has been a fantastic purchase.

2) I include all utilities, fiber optic internet, and parking in the lease so it makes it easy for a prospective tenant to say yes. 

3) It sounds like there are multiple configurations possible with the space. 9 small offices could be any number of tenants from 1-9. 

4) Cap rate is helpful, but only to a point. Yes, it looks like you would have a 15% return on what you have invested, but that's not the cap rate for the area. If you talk to a commercial broker and they tell you that the prevailing cap rate is 8%, then that means your building would be worth $270,000. That's the beauty of forced appreciation on commercial real estate.

5) For a deal like this, I would be more interested in the cash on cash return. If you put down 20% or $29,200 and borrowed $116,800 at 5.5% for 20 years, your debt service would be $9636/year. Net cash would be ~$12,000 producing a cash on cash return of 41%. That is the potential reward for taking a risk.

Hope this helps,