All Forum Posts by: Matt Dorsten

@Aaron Wyssmann, thanks!  Would you suggest writing up a contract with my offer price (assume the sale approach) or a letter simply stating the offer and supporting reasoning for such an offer?

I'm looking at a commercial piece of property that is a For Sale By Owner property.  The owner is older, very difficult to deal with, very unmotivated, and out-of-town... and in my opinion has the property over priced by about 25%.  The property needs a LOT of work (currently vacant & rundown, would be a redevelopment project) but, has good return potential (buy and hold).  So, my question is- how have you all dealt with difficult owners?  Any tip, tricks, or lessons you can share with me is greatly appreciated.

I've spoke with him on the phone which, was painful to say the least.  I'm considering mailing him an offer letter (below is asking price) but, it's likely I'll lose him if I can't grab his attention with the letter.  Hell, maybe the letter is the wrong approach so again, any tips or tricks is greatly appreciated!

After looking at the property with my boss and talking numbers, the opinion was that the sale price of $425,000 is just too much.  I have a tough UNmotivated seller but, I'm going to make a lower offer ($250,000-$300,000) and see how that's received.  It may open up discussion or may cause the door to get slammed in my face.

Now, I'd be interested to hear about other people's experience in turning an UNmotivated seller into, well, a seller.

Good thought. The zoning allows for it but, I'm not sure about the other separation requirements. Considering the size of the building, the marijuana tenant that this property is likely to attract would be Marijuana Infused Products (MIP's), still, they'll pay a premium for the space. However, MJ eliminates the ability for any institutional lending on the property- whether it's a sale or refi.

@Jimmy Klein, thanks for the input!  After all the comments provided (thanks @Nick L. & @Shane H.)  I will factor more vacancy in the pro forma.  

Jimmy, can you tell me what you would expect to pay for a steel building? 

@William Allen, congrats on your success!  What did you think of the $265K appraisal?  Was it what you expected, or lower, or higher?  Was that your one and only appraisal?

@Nick L. a fire suppression is a deal killer.

@Shane H. & @Nick L.- let me back up a second... what makes the deal attractive in the first place is the billboard with $2,500/month income potential. On a $425,000 sale that's a 7% CAP, not bad (not amazing either).

Now for the buildings- I could scrape the property ($50,000???), put up a 2,000 steel building ($160,000 or $80/SF), paving and grading at $50,000 (total guesstimate) and lease that for $12/SF net- 9.2% CAP, looking good! Of course, there is the renovation option that will result in more square footage but for a higher reno cost.

So, with the billboard ($425,000) bringing in $2500/month and the steel building ($260,000) bringing in $2,000/month net- cumulative CAP rate of 7.9%. If I go VACANT (there, I said it) CAP rate drops to 4.4%.

Of course, to reno the building and have multiple tenants would provide some protection so I think worse case scenario is a 4.4% CAP.

@Mikeal Taylor, welcome!

Be sure to set-up your keyword alerts, using "Colorado" and/or "Colorado Springs" as keywords will keep you in the local loop!

@Manuel Angeles, can you tell us more about the relationship building between your company and the flippers?  For example, are these relationships built in the creditworthiness of the borrower, the analysis of the flip, etc.?  Is the flipper expected to make a payment every month if the flip takes 60+ days, like a traditional mortgage?