All Forum Posts by: Bob Langworthy

@Julie Beall I have not rented to a hair salon, but I bought a building that had a hair salon in it. What I know is it was a major remodel to get that space looking decent. Even though they had cleaned up fairly well, there was still hair wedged under all of the baseboard trim, plumbing in random places, extra lights added to the ceilings, and a smell that was hard to get rid of. So if you rent to a hair salon, I would ask for a larger security deposit.

@Michael Ealy first of all, well done! A truly inspiring deal. From here, I would do a cost segregation study to enjoy some of that cash flow at a lower tax rate while waiting for another great opportunity to present itself. At that time I would do a 1031 exchange or reverse 1031 exchange in to the next property.

Lots of podcasts available:

The BP podcast

Joe Fairless - Best Real Estate Investing Advice Ever

Kevin Bupp - Real Estate Investing for Cash Flow

Peter Harris - Commercial Property Advisers

Jake & Gino - Wheelbarrow Profits

Spencer Taylor - The Commercial Connection 

Best,

@Adam Craig, I own a similar building. Prior to buying it, I rented space in another similar property in town, so I had a decent idea of what market rates were and what I wanted in a lease. But if you don't have experience in leasing office space, I think it would be worth it to work with a realtor.

Hope this helps, 

@Adam Craig, that's what I would do. Do they pay phone/internet separately? 

@Adam Craig, Are the utilities separately metered/billed? If not, you can't really do a NNN lease if you are also leasing space. If you weren't in the building and one tenant wanted to lease the entire space, you could do a NNN lease. But as long as you have prepared a careful pro forma, you should be fine doing either a gross or hybrid lease. You can make just as much money (but will have a little more work to do).

Hope this helps,

@David London, you will definitely find investors looking to park money for 6% as they wait for another deal to come along.

@Robert Freeborn, 21 years ago I opened a wholesale greenhouse in Maine with 4 partners and we ran it for 5 years before I got out. It was on the way down when I left and was foreclosed on the next year. Here are some thoughts and questions:

1) If you're talking about running it, do you have any experience in the industry? Managing people?

2) The industry is highly dependent on the weather. A few rainy weekends in the spring can kill the entire year.

3) $75k for the owner is very slim.

4) $900k in debt is huge. I would want to know why a "successful", 35 year old business has such a high amount of debt, particularly given that revenue is only $1M. Something doesn't add up.

5) Is the owner involved in the day-to-day operations? If so, that $75k won't be for you. You'll need to replace them.

Hope this helps,

@Gregory Virgin, a couple points for you:

1) The vacancies can be an advantage. As you've noted, it lowers the value of the property. It also gives you the opportunity for higher rents.

2) The commercial realtor that you'll want to talk with is the busiest one in the area. They will be the one that can quickly answer your questions. The obvious question they'll have for you is, "what's in it for me?" If you answer that in a satisfactory manner, you will get the help you need. 

Hope this helps,

Talk to the small, local banks in your area. They can be more creative.