Homeowner · Graham, WA · Member since 2014 · 5 posts · 1 vote
I spent 10 years as a USAF Combat Controller (Special Operations) and loved every minute, but it was time to "come home". I've been out for a few months.
I've stumbled across some possible real estate investment opportunities that intrigued me. I'm a complete novice so I called a friend who referred me to this site.
I seek to be a leader of my rural community and I believe I can do that through commercial real estate.
My local post office is for sale at $150k with 3 years left on the lease and a NOI of $14,3k and a CR 9.5% and yearly property tax at $2.4k. I was hoping to get a SBA CDC 504 loan at 5.18ish and putting as little down as I can.
Now, I don't know what all those numbers mean. I'm hoping they are good. The Post office is the center of our little town and the ladies that work there are super nice. I'd love to own that real estate for the next 30+ years.
House Flipper · East Stroudsburg, PA · Member since 2013 · 1k+ posts · 205 votes
12y
Welcome to the BP family and thank you for your service. I'm sure you will get the information you want from this forum, this is not my area of expertise. Review some of the pod casts as well as explore the learn section some of the information you want may be in the library of information. Utilize the key word tool to keep informed of areas of interest. Again, welcome aboard.
Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
12y
Welcome to BP, Jason, first post and "First In"!
I was ATC and Intel, among other things, worked with some of you guys in JTF Ops (10th Mtn. Div, Ft. Drum. "Follow Me") long, long ago. How did you like Bragg? I have the utmost respect for Operators that served, so a special welcome!
You will have no problem in RE investing!
I understand the small town thing. Biggest issue is the marketability of properties, mainly the demand side is rather weak. So, expect long holding times.
Don't know if you're aware of the post office closings mentality of congress but I wouldn't bet on a renewal of the lease so much. With any commercial building always have an exit and alternative uses.
Those numbers are probably from the owner, much of which can be ignored as your cap rate will not be the same. From the NOI looks like it could be valued in the 140K range. Fire for effect! However, with that lease the owner should have details on the books that you may rely on, due diligence should be rather easy if the owner opens up.....and I bet they do as they have a limited market to deal with in many respects. You can get competition from nearby major areas though.
You need to start out in RE just as you trained in the AF, start at the beginning, do not jump in trying to learn strategies through guru stuff, but begin with the basics. If this building is your only interest you'll still need a basic understanding of RE, legal aspects and financing.
SBA will take your first born, it's not cheap either getting in but you can get a higher LTV, better get with your lender and investigate that closely. I suggest talking to your Postmaster and get his opinion on the chance of any lease renewal!
Homeowner · Graham, WA · Member since 2014 · 5 posts · 1 vote
12y
Great response, Bill, thanks!
I was suspecting those numbers were from the seller. I did find it interesting that it appears the same seller is trying to sell three different post offices, which are all very rural. I noticed a couple of other things. He hasn't paid his property tax yet, which is due very, very soon. And the county values his property at $137k.
You're advice on all fronts is pretty sound. I'll take my time and do my due diligence. The good news is that I know the post master very well and we talk often. I will absolutely talk to her about her thoughts on the Post Office renewing the lease.
Oh, and Bragg was an armpit. Fortunately I only spent a few months there for Combat Control School. I was busy trying to survive so I didn't pay much attention to my surroundings.
Also, John, thanks for the podcast tip. I love podcasts and I will definitely subscribe.
My friend (a fellow Controller) was this about this website. I'm sure glad I joined.
Rental Property Investor · Annapolis, MD · Member since 2014 · 214 posts · 140 votes
12y
@Jason Schiffner ,
Welcome on the BP! I am not an expert on commercial props. or small town investing, but if I was in your situation I would take my time and educate my self in the area and the type of properties you are looking at. I hear from others: in rural areas you have to be especially careful going in because once you own the property you might be stuck with it for many years to come, in some cases even decades.
I agree with @Bill Gulley if congress decides to put your and other neighboring post offices out of business than you got to make sure you still have someone to pay you rent.
Ray Alcorn has a pretty good course on commercial investing for beginners and others. I recommend it. He is an active investor and also lives in semi rural setting. You can pick up a used one for pretty cheap on ebay.
I am also an USAF vet. used to be computer guy, then intel analyst/linguist at Ft Meade,
Seattle, WA · Member since 2014 · 308 posts · 170 votes
12y
FYI, That lil Post Office you mention. It was there long before Graham grew up. Now its in a horrible location with terrible and unsafe in and out egresss. Its a given when that lease expires they will move. Look across the street. Vacancys for years in some of those strip malls. The Meridian strip is loaded with vacancies.
You may own that property for the next 30 years and but only have a paying tennat for the next three. Be careful.
Seattle, WA · Member since 2014 · 308 posts · 170 votes
12y
One last thing, do you think the current owners would be selling a cash cow? They no doubt already know its moving and are buying or building the new one.
Homeowner · Graham, WA · Member since 2014 · 5 posts · 1 vote
12y
@Val Csontos Yes, I hear you about the concern about the Post Office possibly being closed. I talked to a potential lender and she said in these cases a new lease is signed and the loan is only granted on the condition that a there is a new lease. That makes it a little safer for a long term investment.
@Jay C. I agree, the Graham Post Office is in bad shape. Also, their new neighbor is a medicinal marijuana shop. I also wouldn't be surprised if they moved soon. The Post Office I'm looking at is a different building and is far more rural. It's a small town and people talk, so I'm certain I can get to the bottom of why they are selling their post offices.
Welcome to BP. Nice to see another WA resident join the community. It looks like you're finding out what a great site this is. Much success. See you around the forums.