All Forum Posts by: Steve L.

Martin, in my experience it is sometimes the tenant.  Sometimes another company who leases the building and requires an additional monthly payment/rent.  

I take more issue with you buying a 3,300 sq ft rental house that rents for 1,200/month.  Maintenance will be a nightmare.  I like my rentals 900-1,500 sq ft.  

Beyond that, I like your approach starting slow and trading up to bigger assets.

Good luck. 

Build to suit or a ground lease would be my preferences.

I am in contract to buy a lot that would be a pretty good location for a major fast food chain.   Is there a group of brokers or developers that source locations for many majors chains versus me trying to approach each one individually?  

Welcome to BP!

The tenants are more transient.   These are usually entry level units and price points, so the best tenants usually move up faster too.

I don't have hard stats but I would guess tenants move 30-40% faster from 1/1s versus 2/1s.  

 Yes, I own lots of commercial.  I don't own any other mixed-use. 

Originally posted by @Pete Olson:

1) Do some homework and simply Google Independent Agents in your area and look at their websites for the companies they represent. Find one that you think you may be comfortable with and give them a call to learn more about them and who they represent. They can bid out your insurance with all of the carriers they represent and find the best option to find the balance which fits your needs of price+coverage. I would put good money a smaller (but financially strong) regional insurer could put a nice program together for you. No matter what--Stay away from Captives (State Farm, Farmers, Allstate).

I already use a small/medium sized independent agent and a commercial specialist.  Both of them have given me similar numbers. What is the best way to find a regional insurer?

Ranked in order of easiest to hardest in my opinion.  

1. Find a money partner that fronts all the money and gives you an acquisition fee and a slice of the profits (or prepays some profit upfront).  

2. Find a lender that will loan you more than you're paying.  Almost no banks will do this, private parties and hard money lenders are more likely to do this.  AKA find a really-really great deal and this is possible.  

3. Find a seller that will carry some of the purchase and subordinate to a new lender.  You buy a property for 200,000 that is worth 300,000.  The Seller is willing to carry 75,000 for 12-months in 2nd position.  Get a lender to loan you 150,000 in 1st position.  Seller gets 125,000 you get 25,000 less fees.  

4. Buy a subject-2 deal that is under water or 0% equity and have the Seller pay closing costs.  

5. Buy an apartment that is under water.  Seller to pay closing costs.  You get security deposit pro-rations and pro-rated rents.  

6. Buyer a package of 10 houses and 65% ARV from one Seller. Assign 9 of them at 77% ARV. You just got a free house.

It is possible.  Not easy.  I have bought subject-2 houses for $1.  I still end up sunk 5-10k. By the time I evict/rehab it.  

The only way I have regularly accomplished is through my hard money lender over funding details, but I almost always had to put in money upfront to get it back later.  

Most of the time it is more profitable to find a partner with money and just use some of their cash to chase good deals versus trying to catch a unicorn.  Looking for cash back or no cash deals will probably eliminate 98% of the potential deals and many of my above examples are probably not smartest of investments.  

I bought a mixed use property in December that is Class C in very blue collar city in California.  

Roughly 5,000 sq ft of Retail and 2,000 sq ft of residential.  I have it free and clear right now.  Insurance quotes are coming in at 5,000-6,000/year which I think is way too high.

Anyone have any recommendations for insurers that have a good price on this?  My insurance is usually 2-3% of revenue.  On this it would be 8-9%.  

You are missing a lot of pieces to the puzzle:

- the 120k list price is irrelevant to the bank.  how much above this price your submitted doesn't matter

- the way you are estimating your rehab seems pretty rough

- just like you, the bank does a formula.  short-sale the bank nets 160k in 60 days.  foreclosure we think we net 180k in 120 days.  15k rehab and we think we net 210k in 180 days.  That is how they do their math.  It is sometimes way off, but that is what they do.  

- now if the place is 90 days on market at 180k and very few offers the bank might think that number is more legit and put some weight on it in the BPO.