All Forum Posts by: Bill Schultz

I have a duplex. Both sides rented out cash flows about $100 a month. Not much at all but I bought it as my first house and lived there for 9 years. It made alot of sense then. Now, its worth about $145,000. I owe about $100,000 and there is another lien on it for $15,000. So far I have been keeping it because its a nice property that hopefully will be worth more someday. Problem is we are getting a new road at the property. Our village bills the road to us, the property owners. Just got my estimate today and it will be over $11,000. And we pay $3500 a year in property tax but thats another issue. Even if I could pay the $11,000 over 5 years, it would make this property worthless cash flow wise. What to do?

I talked with the commercial broker in town that sold this building to the seller 5 years ago.

His biggest concern about the building is location. Its not in a bad area, just in an older part of town, far off main roads. His thinks if the main tenant decides to leave, even after 5 years, that it would hard to re-rent, almost impossible to get the same rent amount.

So I would be sitting with a building, probably worth less than I bought it for, and no tenant.

Not sure how that should fit into the big picture here.

yikes what the heck would a person do? Obviously you can try to sell but we all know how thats going for most sellers. Assuming you got a loan in the first place couldnt you find someone to refi you?

Linda

Are you saying you think he has a mortgage that he cant get refinanced? What are all these people doing? Banks cant want all these properties back can they?

Some quick numbers I was given I got rid of tenant and supplier names.

Landmark Location for nearly 100 Years
Large commercial building with 70+Stall Parking Lot Included
13,820 Sq Ft., 86 acres, 37500 sq ft
Handicap Accessible!

Monthly rent Yearly Rent

Rent
tenant1 $4,461.78 $53,541.36
tenant2 $3,605.33 $43,263.96
tenant3 $466.67 $5,600.04
tenant4 $2,075.93 $24,911.16 (numbers don't show recent increase
tenant5 $575.00 $6,900.00 JUST INCREASED to $775 per month for 2 yrs $9,300 per yr
Total Revenue $134,216.52 (now $136,616.52)

tenant1 pays 50% triple net expense
Taxes $13,659.34 $6,829.67
Insurance $4,400.00 $2,200.00
Water $434.62 $217.31
Snow $4,400.00 $2,200.00
gas1 $2,706.71 $0.00
gas2 $1,878.43 $939.22
electric1 $2,356.67 $0.00
electric3 $5,948.77 $2,974.39
Mgr., Clean, Maint. $13,659.00 $2,044.00

Total reimbursement Income-tenant1 $ 17,404.00
Total Income $151,621.11 ( $154,021.11 now)
Total Expenses $51,657.52
Total Income Less Expenses $99,963.59 ($102,363.59 now)

tenant1 Lease Ending 11-11’ + 5yr option, 10-20% incr. based on CPI (been there for 60+ years and one of the state's best locations- perfect long term tenant)

Tenant2 Lease Ending 08-11’ + 3 yr option, 10-20% incr., CPI, again long term tenant !.

Private Office $700.00 Lease Ending 01-14’ + 2, 3 yr options, 2% increase per option, new lease with tenant4 (plus still have 1 open space for $250 per month

tenant4 $2,075.93 Lease Ends 1-14’ Very long term tenant!

tenant5 $775.00 07-12’, long term tenant!

Very very preliminary. Multi-use commercial space. Purchase price, $600,000. Long term tenants. Net operating income of $150,000 a year. Expenses of $56,000 a year. Cash flow after mortgage, $5,500 a month. No exprerience in commercial but $5,500 a month was hard to look past.

Correct they dont automatically change with a sale. You can ask for a property to be re-assesed but from I am told, buying a foreclosure property doesnt qualify for less tax. The city says its not an arms length transaction, but a distressed sale and the price paid then has no bearing on the fair market value with the city. crazy huh.

Mitch

The 3/1 was bought for $22,000 last year and rehabbed. The fair market value is listed as $56,000 which seems low. I dont know when or if it was re-assesed.

The 4/2 has a fair market value of $110,000, hence the higher taxes. Would it sell for anywhere near this? NO!! The taxes on this one really stink.

Paul

Why dont you think a 3/1 is good for a retail flip? I agree with not having any of those things being crummy but could they be added easily?

I am looking at 2 different SFHs that I like. I can only buy one right now. I cant come to a decision. Any opinions would be good.

1st one
fannie mae home, I could have right now for $53,500
Could rent as is for 750-800 a month

taxes $2,600 a year

1400 sqft
4-5 bedroom 2 bath
new siding and windows
Nice location
Garage, nice yard
dishwasher, new cabinets and central air

This house has some nice features but there is alot of old in it. Still all plaster walls, with cracking. Wallpaper everywhere. Carpet bad in some spots, peeling trim and sills. Laundry hookup in basement but basement is short and not much fun to be in. Most doors dont close etc...

House 2

Privately owned rehabber. Could get for $55,000. Could rent for $650-$700 a month.

taxes $1400 a year.
1075 sqft
3 bedroom 1 bath
new siding, windows and roof
pretty much new everything inside, floors, walls, cabinets, fixtures etc.
ok location
off street parking with no garage
1st floor laundry
no central air
no dishwasher

This house jumps at you more becuse it is so new on the inside. The obvious things it lacks are a garage and AC and a dishwasher. Some friends have told me they wouldnt rent a place without those things, but I would.

I am really struggling on this. The smaller house, I would have to put no money in unless I wanted to add a dishwasher or ac.

the bigger house is well bigger with more ammenties but could use a decent amount of updating.

Is it feasible to believe you can buy properties in other states and sell them owner financed without even seeing them. I watched a webinar from larry goins today and he made it seem pretty simple. I know you can buy cheap property in places like Michigan but what do you with it? If nobody is there who do you sell and rent to? Some people talk about buying houses for $5,000 and renting them for $750 a month. Do people in these depressed areas really have that kind of money? Larrys program talks about buying these kinds of properties all over the country and selling them owner financed and making good money. This cant be as simple and easy as he makes it sound can it?