Commercial BRRRR in KCMO Crossroads

[Lucas Taylor]

Investment Info:

Other commercial investment investment in Kansas City.

Purchase price: $725,000
Cash invested: $315,000

Contributors:
Logan Freeman

In the vibrant Crossroads Arts District, this 1903 built commercial building that had been owner occupied as a hardware store. The building was in poor condition with termite damage and brick falling off. We are currently in the process of rehabbing this property to be a total of 7400 square feet of commercial space, and two - 3 bedroom apartments.

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

Already owned a mixed use building on 39th Street. This building was larger and in a great area of the city, with better numbers than my existing property. Potential to have a great cashflow property in a hot area of KCMO.

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

Logan Freeman got a lead from his consulting business, a customer of his had been a patron of the hardware store that occupied the building. Negotiations took months because it was owned by two sisters who weren't on speaking terms, and one was owed money.

How did you finance this deal?

I was able to get a commercial construction loan from Derek Bailey at Great Western Bank. 10 year note, 20 year amortization, 7 year fixed @ 5.865%, prepaid interest only for first 8 months. Required 20% down on total cost (purchase + rehab), with 5% in reserves during construction phase. Saved a lot over hard money!

How did you add value to the deal?

Created four different options for the sellers: Lease option, seller finance, cash offer, bank financed. Funded the deal with a construction loan, which cost us much less than hard money. Analyzed numerous scenarios to help determine best use of the building.

What was the outcome?

TBD! In rehab now...

Lessons learned? Challenges?

Relationships 100% closed this deal. Treat your team well; be reliable, and predictable. They will bring you deals and solutions if they know you'll take action.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Real estate agent/partner: Logan Freeman
Financing: Derek Bailey, Great Western Bank
Construction: Kendon McBee, Full Swing Construction
Architecture: David Grimes, Shelter 24