Commercial Investing in small town North Dakota

[Otto Kinn]

Investment Info:

Retail commercial investment investment in Garrison.

Purchase price: $120,000
Cash invested: $30,000

When purchased the property only had one operating business. I improved the spaces and added two additional commercial tenants.

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

I saw the unused potential that this building had.

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

Existing relationship with the local realtor.

How did you finance this deal?

Local area improvement association provided a buy down option for a 20 year rate of 1.25% through the local bank.

How did you add value to the deal?

I refinanced the property for an additional $30k to build onto the fitness center, shop, and retail space.

What was the outcome?

The value of the property rose significantly because of the rental income. The cash flow rose from breaking even to profitable. Even the local area improvement association voted me in as a new board member, because they were excited to see this sort of ambition from a 24 year old. My short time on the board has taught me the unbelievable benefit that local economic improvement can provide for my own business as well as others.

Lessons learned? Challenges?

Because it was my first investment property, I've learned just how expensive renovations can become. I was surprised at how much money you can save to do most of the general construction yourself such as framing walls and hanging drywall, leaving the important things such as electricity and plumbing to the professionals.

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

I worked with a lawyer to insure asset protection, a real estate agent to assist with the purchase, an insurance agent to find a great rate, and my CPA to create a tax strategy for the end of the year. This team of wonderful professionals assisted me to approach this deal in a far more productive as well as confident manor, than if I were to have done it alone.