All Forum Posts by: Terry Smith

Ross Ayesh Darwin Crawford I want to thank you gentlemen for your response and advise. I was able to go by and walk the property. It is very clean and has a lot of potential to increase in value over the years. The owner has put 30k in upgrades into the 3 apartments up stairs and just started renting then out. So they have just started generating over 6k a month in income. They gave me a copy of the last 4 years of income and expenses: Total income: $189,650 Total expenses: $83,870 Net income: $105,779 Avg yearly: $26,444 Avg monthly: $1,750 After looking at the income and expense I can see how they have not been managing the property well and there is room to add value to the space. With the numbers the way they are even making over 6k a month there is no way I could ever pay $615k for the property. My bank will do a 15 year mortgage at 4.85% which would eat up all of my potential cash flow. How would you guys go about putting in an offer? Should I ask what their terms would be on owner financing first? I was thinking my offer will have to be around 400k which would give me a 10% COC return and close to an 8% cap. I feel this is an extremely low offer but let's face it if 600k was a deal it would have been sold 9 months ago. Thanks for looking over this deal for me and helping me see it from a seasoned investors point of view!

Tim Bishman wow that sucks if they will not see a ROI!!! The building I'm looking into is not registered as a historical marker at this time even though it was built in the 1890's. It has already been renovated and brought up to code and is being used as commercial office space on the first floor and loft apartments on the second. My plan would be to keep the tenets in place right now. The offices are leased to lawyers and CPA's who have been there for a long time. I'm guessing the deal isn't good enough for most investors since it is still on the market but I it might be a good long term investment 10-15 years from now for a buy and hold investor like myself. From your experience in working with historical properties, are there any major things I should look for when I go see the building? Things that are often overlooked. Thanks for the advise and sharing your wisdom with me Tim.

Andrew Johnson I agree with your advise. It is important to figure out what numbers I'm comfortable with and stick to them. It's not every day we come across opportunities we are interested in so its hard not to get overly enthusiastic about them. I know there are probably better places to invest but I always heard you should buy or invest in things you like, for me that is historical properties in small towns. I'm always open to other opportunities as well but I like the charm of old buildings, classic cars, antiques and other old junk I guess hahaha. Thanks for your advise!

Luke H. I like the way you think. I guess I shouldn't worry about who's getting the interest payments. Maybe it will help sweeten the deal with the seller if they offer good terms on owner financing. I am going to look at the building on Sunday and walk through it, when I asked for the income and expenses for the last 2 years the realtor told me I would have to submit a formal offer first. Is this normal? On other properties I have considered they had no issues with giving me this information. The property was purchased about 6 months ago for somewhere around 550k and now is being sold again for 615k. Is this a red flag or a value play from the seller who purchased low and locked in higher leases or renovated the property to demand more money in a quick flip? I appreciate the help in letting me see things from a different perspective. Sometimes we get so excited about a deal that we want it to make sense hahaha.

@Luke H. Thanks for the advise. I have thought about that since i do not need the cash flow right now. Something i always think about is all the interest i would be paying over the term of the loan. No matter what i have to pay the interest to someone, the bank, or the seller. If i pay the seller he wins big time in the deal. I can see why people often consider doing owner financing on a property. If I go the owner finance route should I make a much lower offer since i know he will make a larger return when accounting for the interest? 

@Ross Ayesh I apprciate the response Ross and would enjoy talking in more detail with you. Its a historical building with commercial offices on the bottom floor, mostly lawyers, and 3 loft apartments on the second floor. It has been well maintained and recently renovated. I wouldn't have to do much maintenance upfront. The building will be able to pay for its self and should have positive cash flow. I was hoping to get creative with the deal and increase cash flow to invest in future deals. 

I need help analyzing this deal and figure out if it’s a good long-term investment, buy and hold. It’s been on the market since May so it’s not a great deal or one of yall would have scooped it up by now haha. I have not gotten all the numbers from the seller yet but here are the basics. It’s a commercial building with offices on the bottom and 3 loft apartments on the second floor. All spaces are rented out with long term tenets.

Asking Price: $615,000

Rents: Over $6,000

My bank with do a 15 year loan at 4.85% with 20% down. I plan on putting 200K down but even then the cash flow is not what it needs to be for me. The end goal is to pay down hard on the building and pay it off in 7-10 years. I do not need the cash flow right now but could use it moving forward in other investments and paying this place of early. I asked the realtor if the owner would consider owner financing and they said yes but at a higher interest rate. I was thinking I should look around for other loan options to make sure im getting the best out there but for now I started with my local credit union I have been using my whole life. I could use some advice going forward with this deal, creative financing strategies or how to go about making an offer that works in my favor but isn’t a slap in the face to the owner. I would like to offer somewhere around the 500k range because the numbers look much better when I run them using the bigger pockets calculator. Maybe I could do a 7 years balloon option. The floor is open….. what other options should I consider?

Hello everyone here in the BP community! I am new to real estate investing but have been interested in it since I was a young boy and I won my first game of monopoly hahaha. I have been looking for the right deal for me and my family for a couple of years now. Why has it taken me a couple of years you ask. My interest is in doing commercial real estate investing, mostly mixed unit or office buildings. I'm looking for long term tenets who are running successful businesses and will take care of the property as much as I do. I have been saving like crazy and have a good stash of cash in the bank to start really looking into commercial properties. Unfortunately I currently don't have the capital for the big investments over a million. Not yet. I am looking to find a commercial broker to work with in the local area who has connections and clients across the state. I am looking to also connect with other investors on projects and share lessons learned. I thank you all for the wonderful advise y'all share here with the BP group, I have been following the blogs and podcast for some time now. This seems like a great place to learn so I make fewer mistakes going forward. Terry