Downtown Foreclosure turned into my Real Estate Office

[Melissa Murphy]

Investment Info:

Single-family residence commercial investment investment.

Purchase price: $122,000
Cash invested: $210,000

Found this property as a foreclosure, with 3 offers on the table. Had 4 hours to pull together cash in order to execute on the deal. I called a friend for a private money deal to close immediately, allowing me to beat the other offers. I then worked with a great firm in town to execute on tenant improvements turning the space into the nicest real estate office in town! 8 years later, it still impresses visitors.

What made you interested in investing in this type of deal?

I was in the process of building a new company and looking for an office space. Browsing through the MLS, I saw this property listed as a foreclosure, with the key word, commercial. Currently, a residential unit that the owner had striped.

How did you find this deal and how did you negotiate it?

Finding the deal at 10 am, there were 4 offers on the table, and I knew I had to act fast. I called a well know commercial broker in town who had said he was looking for a real estate deal. He was on a chairlift at the time and said, "you need money? Sure. How much? $80K. Ok." Easier than I thought.

How did you finance this deal?

I closed with the cash from the private investor and quickly called several commercial lenders in town. A local bank was willing to work with me on the rehab loan. After hiring an awesome local firm to do the rendering, the bank appraised the property at an after repair value of $300,000 giving me an LTV of 70%, so $210,000 total, less my $122,000 initial investment, so $88k for rehab.

What was the outcome?

I opened the doors of my new company on March 2012, and my company Prime Real Estate Group still thrives in this location. We have space for 16 agents to pop in, along with a conference room, a private office, filing cabinets, reception desk and two exec offices.

Lessons learned? Challenges?

Asking for money was easier than I thought! A few hiccups during the build-out, but they seem like a distant memory now.