All Forum Posts by: Zane O.

@Ryan Gillette - thanks for your reply.  These are some great things we have considered and will continue to evaluate before moving forward.

To add a few details to the scenario, we currently own this property and have it on the market for sale.  The property will be financed as a commercial straight note for the next 2-years with a corresponding 2-year lease with the couple and purchase option contract at our current asking price, so the principal payments don't necessarily translate here.

The tenants will be responsible for routine maintenance, landscaping, snow removal, etc.  I understand we're still assuming the risk here in the long run.

From the vacancy perspective, our market has softened some in this price range, so we are currently sitting/paying for the property right now.  The lease-purchase turns that cash flow around.  Again we do face the risk in the future that the tenants don't exercise their option to purchase, and we put it back on the market to sell.

Our intention in this situation is not to hold this property long term and continue to lease.  The exit strategy is to sell one way or the other (and we have a comfortable margin from our original purchase price).

We have been approached about 4 times in the last few months about high end SFR property and are currently discussing this with a couple looking to lease-purchase.

The property is a 4k sq. ft. home built in 2006.  No deferred maintenance issues of any sort.  The potential tenant is a professional couple in their mid-50s, their kids are grown and live elsewhere, and they have no animals.  They have leased a home for the past 6 years from a friend who has had great success with them.  We would handle management.

The costs would be:

- $425,000 financed at 4% for $17,000 annual

- $10,500 property tax

- $2,750 insurance

- $120 annual HOA

- $1,800 lease commission

- $1,800 M&R allowance

Total annual cost:  $33,970 annually or $2,830 monthly

+ 15% Profit:  $39,065 annually or $3,250 monthly

What are your thoughts or questions on a deal like this?

Good to see you here, Milton.

We met several years ago through Carl.

Let's get together sometime to catch up and trade ideas.

- Zane

Thanks for all the comments!

The purpose of this "announcement" letter is multi-fold.  Most of the family and friends receiving this already know about the postition, and my partners have been involved in the local real estate industry for more than 35 years, but the "KORE" name/brand is a new brokerage name, so part of the purpose is branding reinforcement.

Each recipient will receive a letter on branded letterhead and a business card in the mail.  I'm a tactile person, so I like being able to hold something.  It also provides a business card, which is easy to give to some for referral.  One week after the letters have been mailed, each recipient will also get a follow-up phone call to the letter to talk specifically about their situation.  A handwritten note (on branded stationary) will then go out 30-45 days later.  All this will be the kick off to our drip marketing plan.

 Yes - I am a huge fan of handwritten notes!  We have some branded note cards coming that we'll be using very frequently for personalized correspondence.

@Jean Bolger and @David Hunter - I think those are both good suggestions.  Thank you!

@David Hunter Thanks for your input.

In my mind, the second paragraph is the reason I'm in real estate - to add to the quality of life and value of our community (specifically through real estate).  How might I word that differently?

Thanks!

We are getting ready to send out an announcement letter as part of our marketing plan, and I would love to get your feedback on the content:

"Dear family and friends,

I’m excited to let you know, in May, I took a new position as a partner in KORE Real Estate. KORE Real Estate, a partnership of Robert Keys, Carol Keys, and Zane Oliver, is engaged in the brokerage, management, investment, and development of real estate.

KORE Real Estate believes investment in real estate of significance increases the quality of life and value of the community around it, and we are passionate about bringing positive change to the culture, economy, and landscape around us.

We are here to focus on your unique needs and to help you successfully navigate your transactions. When the time comes for you, or someone you know, to buy or sell a property, KORE Real Estate would love the opportunity to guide you through the process with the care and attention you deserve. Contact us to experience the difference.

Best regards,

Zane Oliver

Partner

KORE Real Estate"

@Bob E. I have run the calculations reducing the holding costs about 50% as well, and the returns look even nicer.  I just like to keep the most conservative numbers in mind.

I feel the same way you do about an overall slowdown/pullback within the next two years and also agree with your sentiments on business cycles.  We are trying to position ourselves as positively as possible before that time to be able to take advantage of as many opportunities as we can when they arise.

We have a great relationship with our local bank.  Since the property was specifically for investment purpose, they did not have an issue with giving us a commercial loan to finance.  My father-in-law is my real estate partner, and he's a non-occupant of the property.