All Forum Posts by: Oliver Trojahn

Joel, 

Thanks for the insite.  I am meeting with him again to look at more of his buildings on Tuesday that he wants to sell.  Including this one.  We are also looking at his RV Park and storage unit projects.  The projects he wants me to help with.

Eitherway, i am going dig much deeper.

Joel, when he sends me the performance of these properties on paper I would love for you to take a look and let me know your thoughts.

Bill, 

Thanks for the response.  All your concerns are items I am looking into as due diligence.  I don't see 6% as over the top.  Their 60 to 100 dollar increase annually is nothing compared to their investment on building their space out.  These companies have to much skin in the game already.  Their business decision to move out after spending 60k in tenant improvement does not seem likely.  Then spend the same on a new space.  Rents are already under market and the 6% increase is in the lease.  They signed up for it.  Again, that is my rookie opinion.  Could be wrong could be right, I dont know.  but I have confidence in the lease in hand.

No repairs needed, HVAC's all separate and tenants responsibility.  Each lease has the additional monthly fee's required for CAM, Management, Real estate tax/insurance all in addition to my previously stated Net Income totals. 

I defiently don't know him well, probably misspoke.  Our relationship started when he wanted me to work/partner with him on some development opportunities and or help with some of his projects (all which i still may do).  I believe he is looking out for my best interests.  I also think there is a lot of negotiation room on the financing and cap rate.

Property is located just north of plaza off main street.  Don't know the traffic count but it must be one of the highest in the city.  road is very busy.

Just to confirm you opinion.  You feel 25 years WSJ+2% is a good note.  Even if it adjust annually?

It is 100% Triple Net Lease.  All expenses paid by tenants, including exterior maintenance.

Thank you all for the comments.  I have the same concerns, he is being rich on the cap rate i think as well.  The rents are currently all below market, I have reviewed his leases, they have rent bumps of 6% annually on each tenant.  Not 2%, it is more than 6% the first two years.  He does this I would imagine to get the tenants in there to build their space out with lower rent.  This particular property, along with all of his, are in top locations in Kansas City.  When reviewing the leases, the rent increase greatly increase the cap rate in two years.  He is selling to me at the lower "current" below market rents.  I want to pick them up for around an 8% cap with about 150-200k down.

I like the basis point spreads you provided Joel it will provide a negotiation tool.  Like that alot.

Things to note.  The rate isn't fixed for 25 years it adjusts (yearly i think) which is a concern.

Tenants in this building are not national tenants.  All small business's which I think has some risk to it.  However, it is has been fully rented for the past 10 years to my knowledge.  Great location.

I have already negotiated a delayed downpayment, where I pay half now, and in 24 months pay the balance of the downpayment.  I need to consolidate some rental houses since I dont have 200k cash, it is all tied up.

Capital is a concern at 200k per property.  i have a plan to aquire two however I will be stretched.  Figuring out an equity partner would help greatly, especially if I want to buy more of his properties.

Another concern I have is if I unload the same amount of capital into rental houses the cash on cash returns are better, much better.  So, I am trying to determine the "why" I would do this.  It is all new to me.  I feel like my appreciation on commercial will be substantially more but that isnt a reason to dive in.

Thanks again.

I have been discussing possible opportunities with a retiring commercial real estate investor and developer in the Kansas City, MO area.  He now lives out of state.  I have met with him four times to go over the deals and opportunities with him.  He owns his properties free and clear and wants to sell them to me on an owner financed note to avoid a huge tax hit.  Here is what a typical deal would look like:

25 years at WSJ rate +2% (Currently 5.25%)

i need about 200k ish to put down on each.  comes out to about 15% down.

Each property is in a very good location, retail, all rented, and cash-flowing with long term leases. All triple net leases.  Rent increases are at about 6% a year.

Net Income on the first one I would buy is 110k, he will sell at around a 7 cap.  In one year the net income (with rent increases) jumps to 130k, then about 6% a year after that. 

This same guy has also been mentoring me about commercial real estate.  I own 10 rental houses so haven't dived into commercial yet.  I feel like this is an opportunity that I shouldn't pass up. 

I could end buying quite a few properties from him this way.  These propertis are all in A and B locations in KC.

I am curious to here everyone's thought on these deals.  I am excited but also don't want to get burned.  I know the seller well and trust him.

All, 

I am in a position, in Kansas City, MO to pick up multiple commercial properties on owner financing (25 year note).  These properties are all multi tenant retail strip centers located in great areas in Kansas City.  All Triple Net Leases, fully cash flowing with below market rents.  In two years the rents increase substantially per the lease agreement.

Pretty simple question.  I have a plan to purchase 2 of these properties with my own money, however, I need around 200k per property (down payment) to purchase the rest.  I am looking for private money.  Who is interested.  A partnership deal could also be done.

I will pay 7% annually.

Let me know if anyone is interested.

It has already been answered above but always leave the floors for last.  However, you can easily paint after the floors are installed.  It just takes a little more prep time.

Sean, 

Thanks for the reply.  I am using a portfolio lender already with similar terms.  If that changes I will let you know.

I also use conventional.  I use both.

Sincerely,

Good afternoon all, 

I own 8 rental houses and have specialized in rentals on the Brookside area of Kansas City.  Which I have found amazing cash flow and am continuing to pound away at deals.  I am currently working on two now.  I am currently seeking private money lenders for long term buy and holds as I am going to run out of money for down-payments soon:).  I am also interested in the following as I plan to start doing real estate full-time:

• Experience Flipper to partner with.  I can buy the house if you do all the repairs.
• Apartment building mentor/partner.  I am getting ready to dive into this arena.
• Properties to buy at discounts in Brookside in the Kansas City Area. 

PM me.

Sincerely,

That deal is terrible.  An additional 30k in rehab?

I apologize but you need to get out of that deal.