All Forum Posts by: Thomas Handy

My goal has always been to commercial real estate and I think I found a way but need some assistance (analyzing deal and maybe partner(s)).

My realtor gave me the following information on 26 condos selling for $2,990,000.

14 1 bdr - $700-800
8 2 bdr - $900-1100
4 3 bdr - $1250
26 parking spaces
brick building with central air
20-30 years old

HOA paid by tenant - water, sewer, grounds keeping, insurance, management, outside electricity, cable, pest control and pool
rent came out to $22,875/month - 96% occupancy but the condos are 100% occupied
sq feet 26348

The seller is asking for 20% down but is willing to work something ~ creative financing.

First is this a good?
Second how do I make an offer - I don't have 20% and will have trouble getting a down payment at 20% on $3 million.
Third would someone want to partner?

Tom

If it was my property I'd just explain to the tenant that I will put it in the contract that the tenant is renewing their lease and will be staying.

Mike Jakobczak I'll keep that in mind when I place the offer.

Michael Lauther The property is in a good location but a few blocks down it's like night and day. It's close to where some bad neighborhoods are but not in a bad neighborhood - at least not from looking at the homes.

Joel Owens The property rents for $495, about average for this area. The 3 bd 1 ba property is $26,000, 1300 sq ft, and has central heat and air which is two years old.

Charles Perkins I'm not sure what the inside looks like so after my inspection the price could be lowered. I don't expect it to be the Taj Mahal but as look as the basics are there, it should be fine. Nothing paint and carpeting won't touch it up a little if and when the renter leaves.

Greg B. That sounds like an interesting story. Could there be a way to ask the seller if any contingencies are in place?

I may be able to get a look this weekend but need to get an offer accepted in the next day or so. I'll also ask for a schedule E and verify past rent. If I don't put in an offer my day job will keep me tied down for the next couple of weeks.

Thanks for all the input!

Tom

To follow up on what Mike Andrews said, buy a duplex or fourplex if you can. Live in one and rent out the others. You get to be an investor and property manager at the same time.

I asked the realtor a few questions and she said the owner doesn't want the tenant to find out he's selling the property. The owner wanted to make sure the tenant was staying. He would tell the tenant he was selling a few days before closing. The owned did add that the tenants have been wonderful. Also their lease expires at the end of the month.

I did ask the realtor if a new 1 year lease was going to be signed or if the tenant would go on a month to month. I'll most likely put in an offer but will keep my eyes open since this doesn't make sense.

The area would be considered mid to low working class but a few blocks away it looks like a class D neighborhood.

Tom

Chris,
I think you're on the right track but would do one more thing. Stop day trading.

I did the same thing a few years ago. I dabbled in stocks, precious metals, real estate, and bought a few toys. Now that I look back I wished I would have just focused on one area instead of several.

This means if I would have focused solely on buying real estate, I would have more rentals = more cash flow.

I'm no expert when it comes to stocks and unless you can devote a lot of time to day trading and analysis, the stocks owner always has the insider knowledge that we don't have.

What do you really want to do? real estate? stocks? something else?

Just something to think about.

Tom

If you don't like going to the property for issues, just get a PM. You said you'll still CF a good amount.

If you want to trade up for something else and possibly receive a lower CF property, then sell it.

Tom

I'm not sure if you use it, but maybe having a comment about Gravatar (http://en.gravatar.com/) could encourage more comments on your blog.

What are you hoping to accomplish?

Tom

I think it really depends on the property. How much is the home worth versus what you pay for it. I have a condo that I was breaking even on but the property was worth almost double what I paid for it. I plan to sell it one day. But I refinanced the home and now I cashflow.

Tom

Don Konipol In response to your question, yes and no. I don't want to over pay for a property especially if it's a foreclosure. If the property needed no repairs and I made a low ball offer, then yes I'm playing a game with them. But in the properties I looked at I would pay additional money to make the homes rent ready to my standards. I don't think I could be a slim lord.

Tom

James Martin, Mike Jakobczak and Nathan Emmert, thank you for your comments and suggestions. Look like I missed out on this deal but I'm holding out in case the current deal falls through.

My realtor said that has happened a lot to HomePath homes. The homes end up back on the market for whatever reason.

I've put in three offers over the past month or so and it seems like Fannie Mae and Freddie Mac are playing games.

The first offer I put in on a different home I low balled and they didn't even counter. Then I resubmitted an offer for 25% less than their offer and they countered for the asking price. Then a few weeks later they lowered the price to $5000 on what I offered.