All Forum Posts by: Adam Lendi

@Brendan Viehman One of my hats is as a business coach. I can safely say that, unfortunately, many business owners undervalue their businesses. If you get someone who is not savvy, they may see a lot less value in their business than it really has.

A great example of this is my own parents. My dad has owned a limousine company for 25 years and he doesn't think his company is worth anything, because the cars are all used and he doesn't see a value in his book of business. fortunately, I'm working with them right now to build their business to sell for a lot more than they thought it was worth. Sadly many business owners start running their business down into the ground when they are ready to get out.

There are opportunities abound, however, you need to do your diligence and make sure that the busisnesses as good as it looks. You really want to be knowledgeable about the industry you're getting into, so that when you are looking at the P&L, you know that all of the expenses are accounted for. IMO, I would pick a niche or an industry and focus on becoming an expert in that area, as opposed to looking at this as a generalist. You are far less likely to walk into a mess you don't understand.

@Dusti Young Great question! I suppose if I were thinking out loud about it, I would say that if in the event you I had to foreclose on my borrower and take the home back, and I was in it appreciated market, I wouldn't sell it at a loss. I would turn around and rent it again until it had appreciated to an acceptable level, and then sell it again.

@Aaron Duplex I thankfully have not had tenant issues in the past year, despite eviction moratoriums and the like. That said, I do know people who have and it has been tough. My wife and I jumped out in front of our tenants last year and we're sure to humanize ourselves with them so that they didn't feel they were just working with a big corporation or evil landlord whom they could justify not paying. Everyone has been current the whole time (maybe a week late here and there) and they have taken care of our properties.

That said, I know my story is not the norm and I do worry about the long-term implications of some of these government controls. We had a mayor here in Denver who came out and said that landlords shouldn't be charging their tenants for rent during a pandemic. He had no idea what he was talking about and that sort of rhetoric is dangerous.

Personally, I am shifting my investments and I'm spending this year exchanging them into RV parks. It's way more fun, way more lucrative, and a growing asset class.

@Brendan Viehman, do you have an idea of the sort of business you are looking to buy? Sometimes the best way to start this conversation would be to go straight to the owners of the businesses you are interested in purchasing.

If you get in front of a business owner and they do want to sell, this could be a great time too bring in that broker or an attorney, if you aren't sure what you are doing. Otherwise, just like the rental property you mentioned, you're just doing your due diligence on the business to ensure the books make sense.

In commercial real estate, especially where the business is dependent upon the real estate, such as apartments, mobile home parks, and RV parks, you really are buying a business. The due diligence is heavily centered around the books and the operation, more than the land and improvements. I think this is an exciting asset class and I am in the RV park sector. Happy to chat with you more.

@Javier Rosales 3.625% for an investment property is incredible! that same interest rate for your primary residence would be amazing. I had clients getting 5% loans just a year ago on investment properties. I'd be cautious about speculating and waiting. If the numbers make sense, don't slip into analysis paralysis.

@Lynn Fletcherr Commercial has a ton of special niches and ways to slice it. My business partner, @Justin Hoggatt is experienced in apartments. He and I are working on RV parks together now. We could both chat with you about those assets. As for others like retail, office, etc, the knowledge is hyper specialized. I have a great broker here in Denver I could connect you with, if any other area piqued your interest.

Hi,

I'm looking to connect with someone who is a trusted expert in self directed IRAs. Who do you know who I should know?

TIA

Adam

Hi Lynn! My first feedback is that the seller carry route is a smart option. As Robert Kiyosaki says, "be the bank, not the banker." If your tenants can give you a sizeable enough down payment for you to reinvest into another property, collecting interest on your note would pay you nicely. It will get you closer to your $8k/mo goal, so long as the down from the buyer covers a down-payment for your next place.

Yes, our Denver market is hopping right now and as the other brokers on here have mentioned, you are very likely to get well over your asking price if you sell it and the buyers are likely to throw some crazy things into the mix to win the deal. The only consideration of course is where you re-invest that money after you sell. Buying back into the same asset class may not make sense unless you find some off-market deals. You may be relegated to the same competition as the buyers who purchased your place.

If you decide to sell, take a look at some other asset classes. Some commercial assets are performing very well right now and the opportunities are ripe. My business partner and I are working in RV parks now, which are a huge opportunity right now.

Hey Alecia! Sounds like you've found yourself a keeper. Unfortunately, it sounds like he is great at his craft and not business minded himself.

Has he given you any quotes along the way. It sounds like you are guesstimating what you would owe him and like it may not be clear. My caution would be that if you aren't working from an estimate, that bill, when it reaches you could be a sticker shock... or given the way he already runs his accounting, it may be much lower. The risk with not working from a quote is that you are effectively writing blank checks on every job.

In the end, even with someone as great as this guy, always work from a quote so you can confidently send him a check at the end for the right amount and know that it is the right amount. Be sure you have enough money set aside for those past jobs, so you can take care of your guy and clear your books. Pin him down and ask for an invoice on the past work. Tell him you care about his well-being and your relationship and that you want to pay him. Surely he'll give you something.

Your comfort zone will kill you!

The fact that you are stepping outside of it says you are growing. If you didn't feel uncomfortable, I'd say you were either naive or not challenging yourself. From what I've read, you've done your due diligence. The numbers sound like they make sense... 8% COC is great and it sounds like there is room to improve that. Welcome to the big game!