All Forum Posts by: Jason Moore

Investment Info:

Small multi-family (2-4 units) buy & hold investment in Uvalde.

Purchase price: $173,500
Cash invested: $200,000

Debt free investment!

What made you interested in investing in this type of deal?

It was my first multi-family deal. I ran the calculations on BP and it cash flowed. Plus it was a weirdly laid out building & each unit had only 1 bathroom & a tiny kitchen. As I walked through it w/my wife we just knew we could make each unit a 2br/2ba unit. It had a LOT of value add potential, so we pulled the trigger.

How did you find this deal and how did you negotiate it?

It was an off market property that my realtor knew of because she had discussed listing it for the owner in the past. I was told the owner would not accept an offer less than $200k because we had floated a VERBAL offer first of $165k & that was the response we received back😀. So we waited about 3-4 weeks and this time I told my realtor to make a WRITTEN offer for $173k (we felt the owner’s realtor was going a little rogue with the verbal offer) AND my wife & I wrote a personal letter that said

How did you finance this deal?

1031 Exchange

@Hoseah Njuguna I am a commercial investor as well as a residential investor. I started out building 5,000 & 10,000 sf. Office warehouse buildings along an interstate service road (great visibility). I then had an opportunity to build a new bank but I had to find the land for the bank. But I persevered for almost a year’s worth of searching for land that wasn’t priced as though the ground was covered in gold nuggets when I happened upon a guy I had known through politics who offered to sell me part of his shopping center. There were two 10k sf of buildings (20k in total) where I had already spied that there was enough room to put that new bank building. I’m sure most people on BP will faint when I say this, but it was during that negotiation that I first heard the term “cap rate”! Trust me it wasn’t long until I had studied up on what that word meant but now I know more of the lingo.

The point I’m trying to make in this post is that you should be reading as much as you can about the real estate you’re wanting to buy but don’t let that big you down for years until you “know everything there is to know” about those subjects. I’m a commercial masonry builder then about 20 years ago I started developing property with a partner to put the office warehouse buildings on about 22 acres. Then in 2008 is when I bought the office/retail strip center buildings and then designed & built the bank building in front of those two buildings.

If you have experience already moving in those circles then there's no reason, with a little coaching, reading, etc. that you couldn't dive right in. Of course do your homework and know that some of the same math principles that apply to purchasing SFR, apply to commercial properties; they have to cash flow, you have to account for capex, vacancies, etc.

Keep asking questions! You are on the right track!

I've been using RentRedi for almost two years now as I have grown up to 16 units! My portfolio consists of a retail strip center, a bank, and then various SFR, 4-Plex then a couple of other commercial properties. I considered a few months ago going to another app because it was able to specifically track commercial property "separately" from residential. But in the end, RedtRedi has recently added some more functionality to their software (you still can't use it where the verbiage is different for commercial versus residential) and their customer support is pretty good (you might have to wait up to 5 min. if you're using the online portal for help). I have not haad to even use the customer support telephone number. I like the process to prequalify and qualify potential tenants. The simple prequalification weeds out a lot of people who would not otherwise qualify for the unit they want (income too low, too many pets, etc.) The ability to set up your late fee rules (by unit or universal rules) helps remove a lot of the issues with assessing late fees. Since using RentRedi I have had a TOTAL of $25 in late fees assessed against all tenants COMBINED!

I am truly glad I have stayed and grown with RentRedi, especially for the price! Even at full price, it is a good bargain but an even better deal if you are a BP Pro member where you get 40% off! If anyone is interested in more details about RentRedi please feel free to ask!

Jason Moore

President

@James Edward does anyone think that (a part of) the lack of inventory is due to all these darn home improvement/house flipper tv shows?!?!

Hey @Phillip Lanier! I'm in Uvalde also! We moved here 3 years ago from the oilfields of Odessa/Midland. We love the new slow pace of Uvalde & have bought two properties in the last year, both of which are project properties! I've been in commercial construction for over 25 years & added real estate about 16 years ago (commercial & residential) so if you need a helping hand let me know.

Ndy Onyido is correct...your parents could either: 1. Become part owners of your company by putting the money in the company as contributed capital, or 2. They could simply put the money in as a loan to the company with a market interest rate that you paid back to them. Assuming this loan would put them in a first lien position on the property your working on, 3. A personal loan to you, again with them in first lien position.... I mention making sure that your parents are in the first lien position assuming they are putting in the bulk of the funds for this property and also assuming you haven't already gotten a loan on the property (which of course would mean the bank is already the first lien). But as a person with experience in high dollar family real estate & business deals they can get ugly fast. It's best to make sure that your parents feel that you are putting them in the best place to recover their money should things go sideways. Too often family borrowers tend to feel like they can just walk if a deal goes bad! Not saying you feel that way but you have to go above & beyond even what you would with a bank!

Thats a great point @Joel Owens! Y'all have been very helpful! 

Percy N. lol! Normally that might work but my wife & her dad haven't spoken in 5 years! That's what's made my situation all the more difficult! Joel Owens that's where my brain was going this morning because I do know a broker who also invests in this asset class. Here's the other wrinkle as of this morning, the "partner" is actively peddling some of the properties for sale (which is fine) but again he is suddenly "talking down" our own property when normally he shoots for the moon when he's selling. This particular building he's trying to sell (which has been leased continually for the past 7 years) he's trying to sell to a company for their home office. If I look at value of the building for its income potential it's a $2 million building; if I look at it as these potential buyers are looking at it for their use for their business it's a $1.4 - 1.6 million building. What is the fair way to even approach all these competing factors?

That was my suggestion but my cheapskate partner doesn't want to spend the $3500 they are charging for commercial appraisals these days. So it appears that I may have to just spend the money myself and get credit for half of it at closing. I had hoped not to escalate it to a war where lawyers end up getting all the money! lol

Yes! We did do a partnership agreement but it doesn't spell out the basis for selling the properties. It just allows either partner to give reasonable notice they desire to leave the partnership then the assets can be divided or sold, liabilities paid/divided. We actually sold a building this week & I was able to do a "swap & drop" 1031 exchange with my 50% of the proceeds thanks to Teresa Person at 1031exchangecorp.com