All Forum Posts by: Adam F

If he could build that cheap, he wouldn't need you. He would be smashing out houses left and right and laughing his way to bank.

Bill more then adequately explained my strategy.

I recently used this on a commercial building that went from a 200k to 130k price drop last year on a 2 year note. I also used this on an industrial park that went from a 600k to 450k price drop on a 3 year note. The down is about 20% average or more to do this. Note and trust deed, and do payments based on 30 yr term w/ balloon, average interest is about 6%. Fix what needs to be fixed in the term and then refi.

Electrical Engineer.

About 8 years ago one of my employees was telling me about a former employer who owned a self storage facility. He sold it 5 times before it finally stayed sold. Each time he sold it he carried the note and required 20% down and charged 7% interest. His strategy was to find investors looking to buy with questionable safety nets and unrealistic expectations. He was effectively betting on them defaulting within a few years and reclaiming the property, which he did - over and over again.

I've used this same strategy in reverse, make the offer so sweet they can't help themselves at the prospect of taking your down and reclaiming their money. I provide no financials and I'm young so most people assume I'm foolish. We setup short term ammoritized notes that pay off in 2-3 years with large payments and they just cant help but take it .. It's greed. And it's worked to the tune of 2-3 deals a year for the past 6 years. We buy 2-3 a year, and pay off 1-2 a year.

I should note that I switched realtors at the very end. The listing agent was getting hostile towards my tactics, and I found a different agent that didn't have a problem putting in my final offer.

The light gray walls are everything that was being deleted on round 1 of engineering. You can see the new walls clearly. The entire perimeter of the building required 2x6 framing with blocking that are epoxy attached to the outside wall, effectively making it a facade. This was the original show room area, we put some kid toys in there when we were looking for a tenant.

Demo was quite extensive. To give you an idea:

And:

I think all these pictures are about 7 months old. I will see if we have newer ones that don't violate our privacy agreement with the tenant. I cant post external pics for that reason.

This a tale of a property I closed one year ago to the day, April 4, 2013. Arguably one of the most difficult properties I've ever acquired.

Property: 4600 sqft commercial building, clay tile construction w/ solid beams. Beautiful (exterior) 1930s ageless appeal, huge windows in the show room. Great light. Previous use: Ford Dealership w/ Gas Station circa 1940s, Ford Service center 1950-60s, then Honda Dealership 70s, and then finally a waterbed store and various antique stores more recently..

Bad: Inside - horrible. Just crap in every way imaginable. People had hacked their business into this building for 50 years. Really bad: Buried underground storage tanks. Below ground hydraulic vehicle lift sump that was leaking. Paint falling off the walls. Exterior wall that wasn't stuccoed required significant repair. Boilers needed to be decommissioned and gutted. Bad roof, etc.

Listed at $300k. Offered: $200k. Initial offer rejected. Seller accepted an offer at $260k is what I heard (no verification though).

Under 2 months goes by, and buyer can't secure financing due to EPA issues with building related to underground tanks and hydraulic sump. Bank is requiring a stage 1 cleanup. Property is re-offered to me at $200k AS-IS. I refuse and offer $160k. Seller refuses and I figured OK, end of deal ... or so I thought.

I forget about the building all together. 6 months later, realtor calls me and tells me property is back on the market, all underground tanks had been removed, and stage 2 cleanup and had been performed and signed off. There was offers on the building AGAIN already, and wanted to know if I wanted to offer. I told them I would offer $150k. Realtor puts in the offer, immediately rejected. Seller accepts a much higher offer. (It was owned by a trust and they were a serious pain in the butt).

~10-15 Days goes by - maybe if that. Yep, wouldn't you know it - banks still wont finance it. I guess the local credit unions dont want anything to do with a stage 2 clean up building. Buyer gave up, and it was re-offered to me. I walked through the building, noting what a terrible job decommissioning the tanks they did and just massacring the floor to get the hydraulic sump out. I put in an offer of $130k, $75k cash, 30 day close, owner carry a note of 55k for 2 years at 6%. About a week later, the seller accepted, we closed April 4 2013.

We are currently at month 8 of remodel. It will soon open up as a 50s themed restaurant with a full remodel, structural upgrades, and a laundry list of upgrades. I already have a tenant signed and waiting for construction to complete. We are charging a base rent of $1/sqft per month. We increased the square footage to 5420 square foot with an upper level addition as well. The opening of the business should coincide with the paying off of the mortgage note. It was structured as note & trust deed.

Total costs to date:

$130,000 purchase price. $1500 closing cost.

~$27,000 in direct labor (employees)

~$14,000 in materials

$8200 structural engineering & architectural fees

We are about 75% percent finished with the remodel at this point.

Happy hunting.

$83 PSF for a hollow steel building/warehouse is insane. I've put them up for under $30 PSF with 6" slab and rebar. That's crazy contractor markup right there. I mean hell your not building a house!

How much money did your boyfriend use per deal? I know people who use next to nothing (like $10k a property) and then there's people like me that use $45k-60k a property on average. I guess you'll just have to try it and see. Best thing to do is just go out and do it. Who cares if you lose money the first time. You wont the second.

Sell, but hire a negotiator. I used one last year on a deal that went south quickly. I think I paid around 1%. It can make all the difference in the world.

I employ full time construction workers for facilities maintenance & remodels. Regardless of title, it comes down to the individuals capabilities.