Investment Info:
Other wholesale investment in Nashville.
Purchase price: $600,000
Cash invested: $1
Sale price: $700,000
100 Unit Mini-Storage located in Charlotte Park, Nashville, TN. 5 minutes from downtown. 95% occupancy. Zoning allowed for 4 story,18 units/acre MU.
What made you interested in investing in this type of deal?
I realized the lot was zoned for commercial, MF, 18 units per acre. It was also part of the "city center" which had way less restrictions(i.e. favorable setbacks, taller units). The property size was 1.02 acres. I knew builders in this neighborhood were paying around $40k-$50k/unit. All I had to do was talk to the owner and see if he wanted some cash for his place. So I walked inside and started the conversation.
How did you find this deal and how did you negotiate it?
It was 1 block down from a 4 lot, 15 unit, rezone that I just completed and sold to a builder for development. I drove by it and did my DD and realized the potential. I knew that I could get at least $700k so I had to get it under contract for less than that. I met the secretary and left a note for the owner to call me. After a series of conversations w/ him, him consulting with his RE agent, he agreed to $600K. I immediatly delivered a contract with a 60 day DD. I found a buyer within 7 days.
How did you finance this deal?
I put down $1000 earnest money.
How did you add value to the deal?
I provided the buyer with every potential option the property was capable of. I showed them the zoning laws and worked with a local engineering firm (all within my 7 day window) to provide him a few simple sketches of what was possible. I eliminated any possible questions they may have had through my presentation.
What was the outcome?
We received the financials from the owner through my DD period and realized the 100 units had a 95% occupancy. The place was cash flowing $7k/month. I knew I had to either raise $120k and purchase this property myself and split the $7000 2 ways OR sell and make $100k in 30 days. The rents would have taken me 2.5 years to recover my 30 day potential PLUS my business model at the time was 30 day flips. Find a deal, find a buyer and move to the next one.
Lessons learned? Challenges?
No challenges other than being consistent with my follow up with the owner (3 months of F/U) . He was an older guy and that complex was his retirement. So understanding the sensitivity to that was hard. Also keeping myself encouraged when it seemed like he wasn't interested was hard. One of the biggest things I see with new wholesalers is they get super discouraged if they don't have solid leads they are working on. You have to stay positive and be able to pump yourself up when you feel deflated
