All Forum Posts by: Jack Clough

@Brook Decker, the Temple U area has become pricey. I don't like to invest where everyone else is, but I do have a friend who bought a multi in the Francisville neighborhood there. He bought in the mid 200's, gutted and rehabbed for another 250. He'll probably break even at best. 

Maybe check out the Brewerytown neighborhood. Also, I'm an investor and agent in Wilmington, DE and am happy to help you understand that market as well. Other ideas, Allentown, West Chester, Media PA, Newark DE...

@Sue Manchel there is no way to know for sure, but we'll see. I personally know folks who work for Rob and Chris Buccini and wouldn't invest their own money in Wilmington. As an owner of a couple properties downtown this was not exactly what I wanted to hear. However, I'm an optimist and I'd rather look where no one else is looking. I also have good reason to believe that those folks are wrong. Either way we have to be smart and buy well.

Robert, I'm in Wilmington too and would be happy to share ideas sometime. PM me if you want to chat about how we can help each other. Best, Jack

Hi BP folks - somewhat newbie investor and closeted Realtor. I have one commercial property owned and on a 3 year lease. Looking to purchase another and here is where I'd like help. There are two commercial properties next to each other on a street of commercial row homes. They have been connected on the inside through the walls in the front and back on both levels and the basement. Current tenant is paying well below market rent (like 75% below). There are 16 parking spaces in back which could rent for $40/mo each. Seller (estate) is trying to sell the properties as a package. Each property was appraised last year for more than the list, so the seller got the not so bright idea of raising the price despite getting no offers. Then seller got.... no offers. Finally seller has lowered the price back down to where it's original. So, all that said, I'm looking for help on ideas to get it under contract.

Condition of properties: It is an old building and they need some work and new systems. Could be a 50% gut on each side.

Getting it under contract: I could just place an offer, but I want to be more strategic than that and have a better chance then just "hit and hope" (golf saying). I'm honestly not sure if the seller will reject anything below listing price, but let's assume that 75% of list is acceptable.

Offer: 75% of list for each property in total (but only 50% of list on the 1st property). Yes, on inspection contingencies as I think I can squeeze more out of them due to some water damage and some other issues. Settlement on the 2nd property will be contingent on the rehab, appraisal, and refinancing of the 1st property which may be 6 months or more later. I'll say this is partly due to the process and cost of separating the two properties. But I won't fully separate the two properties in hopes that the contract on the 2nd property stays alive (which I think it will because we'll be paying the barely below the list price for that one). I know, probably over thinking this one which is why I'd appreciate some honest feedback from the BP community. Thanks in advance!

@Bruno Franco Netto Seems like a bad deal at that price. However, that's the list price. What's the property worth to you? With your calculations it seems like the property is worth a lot less. And if so, then at what price does it work? You said your an agent, so you must've run some comps and if so then how'd they look? How's the market as far as turnover? Is it a renter's market? What's the condition? Have you seen it in person? (As you know they NEVER look the same in person).

Oh and that whole thing about higher minimum wage means higher rents... All you have to do is look at Seattle. They raised the minimum wage there and guess what happened? Income went up 3% and hours worked went DOWN 9%! Shocking right? Not really. 

Thanks guys, very helpful. Does a 65/35 split with no interest sound reasonable considering I'm acting as agent, GC, etc...?

I have a investor who will lend 150k + in cash with me to flip and BRRRR properties. His terms are 5% interest on his investment and half the profits.

Does anyone have good insight on how best to structure this partnership?

BP folks - I need advice on creative ways to structure a partnership with another investor. So, here's the deal: I would do all the work and he would provide the financing, (although I can add my own cash and financing as well if needed). His terms are 5% interest and a 50/50 split. I would flip, BRRRR, or whatever strategy works best for the deals I find.

I've been talking with an attorney to set up an LLC and include an operating agreement that spells out these terms. My questions are: should we own the LLC together, or should my investor draft a separate financing agreement with the LLC? Are these terms reasonable? Are there better ways to structure the terms? Any advice would be greatly appreciated. Thanks in advance.

If the seller doesn't agree then I'd walk. If they want the deal then they'll come back to you. I think they'll agree because the report is out there now and they are required to disclose the issue so they are going to have to deal with this with the next buyer anyway.

BTW why was there an inspection 7 months ago? Was it under contract w someone else and the deal went south? And if so then I'd want to find out why.

How does this work? I've been trying to figure out a way to do this in my town as well, so I'd love to know more details. My questions are 1) what about rehab costs? most of the homes in my town on the East side for example are either boarded up or need a lot of work. 2) and what about vacancy rates? 3) Crime and drugs?

I can get dozens of properties here for next to nothing through the land bank and the rest I can buy for less than 20k each. But they need to be gutted and rehabbed. The DDD (downtown development district) will award grants up to 50k per building, however, they only pay up to 20% of whatever you spend on rehab. So, if you spend 30k then you get 6k. So, maybe this could be done but only on a large scale like your talking about and with a lot of cash and that's a big gamble because you're assuming that the city will get tougher on drugs and crime and the whole thing can be turned around.

Anyway, I'm interested to here more specifics and how I may be able to apply this to my city as well. Thanks!