All Forum Posts by: Bruce Clark

thanks for the advice  @Joe Villeneuve. 

@Patrick L. Thanks for the advice. I didn't even think of just listing the 4th unit myself. I guess that's what this site is for. 

My realtor approached me with a package deal of 4 properties with a total of 6 units. 5 of the 6 units are occupied.   These properties have not been listed yet. Realtor says that the seller is out of state and inherited these rentals from his parents. Seller REALLY wants to sell these units as a package. I walked all of the properties with the realtor yesterday. One of the properties is in great shape. It has great long term tenants and honestly I would pay the full asking prices without blinking an eye. Two of the properties are fixer uppers, but I can make them work with a little negotiation on the price. However, the 4th property is a dog. Granted it currently has a tenant that pays rent that is actually above what I would say the property demands. However, it is in a terrible location - on a steep hill with no parking. Further, should the current tenant (a single guy who doesn't mind paneling, worn carpet, old cabinets etc) move out, it would need considerable upgrades. Also, considering the hill and the parking, I think it will be hard to rent regardless.

Generally, if the 4th property was listed individually, I probably would not offer on it (even thought the selling is only asking $19,900). My question is, is it worth buying this property, which may give me a little cash flow but in the long run will definitely not appreciate, in order to get the other properties which are good properties at very good prices. Or should I try to just offer on three of the four and risk losing the properties.

Thanks for any suggestions and/or advise.

@Jeff Kehl thanks for the tips. Your suggestions make a lot of sense. I am going to get on the phone with some commercial agents today and get the ball rolling.

I have experience with buy and hold residential rentals. However, I have no experience with commercial property or leases. With this said, I recently came across a commercial property that I believe presents a great opportunity. I think this the property would be a prime location for a dollar general, family dollar, a small grocery store, or possibly something else.

My question is, if I do not know what tenant if any would be interested in the property, how do I estimate my all in price? For example, if I know that Dollar General wants to lease the property, I can look at their site requirements and calculate the costs associated with bringing the property up to those standards. Then I can determine what a reasonable purchase price would be and if the property is a good investment. However, if I do not know who the end tenant will be, I do not know how to estimate the costs. 

Should I reach out to different companies and talk to them about the site and try to determine its viability and their interest? Is that even something that people do? Is it a good idea or could it result in the company or another investor learning of the property and "stealing" it?

If my question is way off for one reason or another I apologize - again I am learning at this point. Any comments or suggestions are greatly appreciated!

I currently hold some residential rental properties, but I have come up with a potential development idea.

In a small town near where I live, the state has released plans to construct a bridge crossing the Ohio River. It is scheduled be completed in 2020. The final plans for this bridge are complete and they call for it to come to a light in the middle of this small town (with no traffic lights currently). Traffic will then be required to turn left and travel through what is now a residential area for about a quarter of a mile and then get on a state highway. The traffic studies that have been completed call for an increase from 900 vehicles per day to 9,000 vehicles per day in this short stretch of residential area. 

The plans also call for the road in this residential area to be widened by 6 feet (which is the size of the current right of way). I know a couple of the homeowners who live at the intersection where this bridge is going to be constructed. They are not happy to say the least. They are losing what they perceived to be 6 feet of their lawn without any compensation (the state always had the right away but just never used it, so "legally" they aren't losing anything.) They are now going to live at the corner of an busy intersection, when they simply want to live on the quiet residential street that they lived on before.

My idea is to approach these homeowners and have them execute options to me. Then I want to attempt to market this larger block of land to commercial developers (there are no zoning problems). I see this as a potential win - win for everyone involved.

The problem is that I have never done a deal like this or anything similar. Is something like this even worth my time? If I get the options signed, what do I do next? How do I estimate what a developer would potentially pay for the property? etc.

Any advice, comments, suggestions are very much appreciated.

Please be aware that when asking questions like this, unless you get an answer from an attorney who is licensed in the given area, you must take all comments and opinions with a grain of salt.

With that said, this is my piece. First, it sounds like the first and best option of who to recover from is your plumber and/or his insurance company. He caused the damage. 

You could also attempt to recover from Plumber C for his negligent installation. You could also attempt to recover from the seller if you can establish that they were aware of this issue and did not disclose it - which you should be able to. These are all viable options.

From my experience, it is likely that Plumber C's insurance policy will not cover this issue. The policies typically do not cover faulty workmanship, which is what it sounds like you are dealing with. 

The problem with pursuing any of these routes is the amount of your damages. Hiring an attorney to recover $10k ends up being a wash in a lot of situations. I might call some local attorneys and see what they tell you. Otherwise, you could just pursue the claim pro se. Again, how much is your time worth?

@David 

@David Dachtera the ARV will be in the $150k range. It is in a nice area where some homes are selling for well over 200k (which is a lot for eastern Ohio). I really cannot imagine that, even in its current condition, it would not appraise high enough. I really think the prior buyers were attempting to use an FHA type product or they were using a large national bank. I know I could easily get a loan for the $45k from the local bank that I have a great relationship with. The $50k rehab may be a little more of a challenge. Honestly, I am not sure though, because I have never approached them with a flip project.

I am going to walk the property with my contractor and have him really take a close look. Then if there are no issues, I will make a lower offer that I can cover should they accept. 

Then I think I will keep making the same low offer once a month and see what happens.

Thanks everyone for the tips. I am going to walk the property with my contractor and assuming he doesn't find any major issues, then I'm gonna make a significantly lower offer. If they take it - great. If not, I am already looking for the next one.

@Mark Holencik I appreciate the advice. I do understand the power of a cash offer. I am not in the position yet, but I can get there eventually. As I said, I do have some buy and holds, and I am building a savings from my cash flow. I have not done any flips yet, but i am working hard on it. Sooner or later I will get a deal together. My plan is to use all the profit from my first deal to fund my second and keep rolling. I will get there.