All Forum Posts by: Brad Williams

An LLC will give you some additional protection. It's not that difficult to set one up and although it's not absolute protection -- coupled with insurance it's not bad and way better than not having one. Just be sure to treat it as a separate entity (don't commingle funds). Just another point though, if you are financing the property through a bank, the transfer will allow the bank to call the loan due under the due on sale clause -- they probably won't but, do you want to take the risk -- just consider that.

Thanks to all for the advice. @Joel Owens you advice is very good and conservative as I usually am. As I said in an earlier post, if I could find a building in the right area to repurpose that would certainly be the way to go. I will keep you posted as things develop. @Karen Margrave thanks for your advice too, I may call up on you for more advice as I get a little further along. @Chad Bernstein I will keep everyone posted on the progress.

I have a medical billing company. I do agree that an existing building that could be retrofitted would be preferable from a cost point of view but, I have looked for about two years for buildings that are on the market to buy and have not found any that are suitable. I have looked at a few dozen. Typically the issue with existing buildings is adequate parking and appropriate size. We need about 10 parking space per 1000 square feet. For our needs, we currently rent 13,000 square ft so, I am planning to build 20,000 sq ft +/-. The only existing buildings in my market that meet those requirements are retail buildings which could be converted for our use but, typically retail space that are good deals (foreclosure, bank-owned, etc.) are in very undesirable areas or are too small or much larger than I want to take on. Land is certainly not cheap ($5-9 sq ft.), especially since I have been told that I need a minimum of 3 acres but, there are a number of bank owned lots in my target area for less ($3-5). Total cost is currently estimated at around $3 million with rental rates in the area in the $18-25 per sq ft range for class A space.

I am in the early stages of deciding whether to build an office building. I own a non-real estate business and have rented space for a number of years. Ideally, what I want to do is build an office building that is larger than needed for my business and lease out the remaining space. This a very large investment so, I would like any advice that someone who has done this has to offer. So far in comparison to residential, everything seems to be disproportionately more expensive. If you have built an office building, message me on this forum or privately. Any advice is appreciated.

Don't mean to put you on the spot but, we are a year later so, I'm curious. Update us on whether you made the goal. If not, how close did you get?

Bill,

Thanks for sharing your story. As an attorney I have handled a couple of really ugly land disputes between family members while handling estates. I always try to get them to work it out like you did but, rarely do they take my advice at first but, eventually they have to work it out.

I noticed you have banking and mortgage experience, how about sharing your best financing lesson?

Even though I have been doing this a few years, I still consider myself a newbie. I just had a deal fall through and learned a new lesson. Well not a new lesson but, was reminded of a previous lesson and why I go so far with inspections.

We are in a area that very bad soil, so many, if not most, properties need foundation work which can range from minor to very expensive. In this recent deal, I had an opportunity on a pocket listing from a realtor I have worked with many times. I put in a contract and the numbers were very good, at least for our market. The home had foundation issues but, I was assured by the homeowner and the realtor that it was not an issue because the house had a lifetime warranty on the foundation.

So, I got a home inspection from a good home inspector and fellow BP member. The inspection was good overall -- some issues but, he also did some measurements of the foundation for me and confirmed the issues that I already knew. So, as part of the due diligence, I called the nationally advertised foundation repair company that had the warranty on the property. First, they were a pain to deal with and refused to set an appointment for me and refused to even talk to me about the foundation. Through the seller's realtor, they did come out after the homeowner called and set it up. The ultimate result was that the foundation company did not think any of the reparis needed were related to the "lifetime warranty" and quoted $28,000 in additional work needed. Keep in mind that seller and seller's realtor said the foundation was not an issue and that it would be covered by the warranty, they provided the warranty and all the necessary documents to confirm there assertions. BTW, I believe that they genuinely believed it to be true so, I don't blame them. Now if I had owned the property, I would argue and possibly sue the foundation company over the denial of warranty claim but, I don't own it and am not looking for that sort of issue on a flip.

So, that long story can be summed up with an important lesson -- make sure you not only do inspections but, follow through on the due diligence part of the deal before closing and include contingencies in your deals so you can walk away. Avoid problems that are going to delay your investment and, even worse, eat up your profits. I ultimately walked away from the deal after spending some of the best money ever on proper inspections. But, I wanted to share this story and lesson.

I would love to hear other investors stories and lessons learned.

Thanks for your thoughts. As you can tell I am trying to talk myself out of this deal even though it looks great on paper.

I have successfully flipped a number of properties. My typical property has been under 2000 sq ft in a good neighborhood with good schools. I have an opportunity outside my past experience. The home is nearly 5000 sqft and in an older established neighborhood. The public schools are not good but the neighborhood is often occupied by families whose children attend the private school close by but, homes in this area do sit on the market a little longer than the ones I typically do. On paper this deal is good but, I have reservations about the relative cost of this much larger home. I want to hear from you guys (or gals) with experience. Should I take this deal or keep looking and stick with my typical deals. Experiences that would sway me one way or the other would be helpful.

I would really like to hear from someone who actually has invested 2 million in cash. We can all speculate and dream but, is there anyone willing to share how they actually invested a nest egg.

BTW, my speculation is take 500,000 and invest in real estate, diversify the rest in some other investment type, including something that provides an income stream. Work to turn the $500,000 invested in real estate into another 2 million by reinvesting all profits.