All Forum Posts by: Chad Bilstein

so I have this deal, it looks great. commercial Property in Denver. it is a warehouse with an existing tenant. the business is a legal grow oporation. the asking price is 1,025,000. the monthly lease is $12,000. total monthly estimated clear profit is $3,450/ month. I thought I had a Private lender lined up at 100%, but he was a scam. It all looked good until he insisted on an origination fee up front of 1%. I refused to pay it except to a title company. when he insisted there was a 100% money back guarantee and he needed it to process the loan, I walked. Origination fees and other fees are paid at close or rolled into the loan. Anything else is likely a scam. the owner is still interested so I am asking my fellow investors, if you only had $10,000 for this, what would you do? Thanks, Chad Bilstein Buyvon Investments LLC

so I have this deal, it looks great. commercial Property in Denver. it is a warehouse with an existing tenant. the business is a legal grow oporation. the asking price is 1,025,000. the monthly lease is $12,000. total monthly estimated clear profit is $3,450/ month. I thought I had a Private lender lined up at 100%, but he was a scam. It all looked good until he insisted on an origination fee up front of 1%. I refused to pay it except to a title company. when he insisted there was a 100% money back guarantee and he needed it to process the loan, I walked. Origination fees and other fees are paid at close or rolled into the loan. Anything else is likely a scam. the owner is still interested so I am asking my fellow investors, if you only had $10,000 for this, what would you do? Thanks, Chad Bilstein Buyvon Investments LLC

I have looked into starting small with trailers.  That's easy and the cost is minimal for set up, skirt, weatherproofing etc.  Buying a trailer on site in a park is best, but even moving one to a park is doable.  This deal just seems so good except for the fact that the owner is delusional thinking its worth $150K. 

I spoke to a couple of realtors I know just to be sure I did my full due diligence.  They tell me anything above $220K in this area would be about the max.  That's about $40K in the wrong direction.  I'm glad I went through this exercise, it taught me a lot very fast.  I'm just glad I didn't learn by losing my shirt, pants, shoes, and one sock on my first deal.

Thanks Mark, I was going to call the attorney in charge of the probate process for the estate to find out that info, but in looking at the entire picture see that my estimates are way off.  I would never get above $250K at final sale for this deal and the potential profit would be less than $35-$40K.  with a potential 18 month hold time its just too risky, especially for a first time deal. 

My original thought was to buy it, split the land into one 40 acre plot and 2 20 acre parcels.  Then have 2 new home sites to prep and sell.  Problem is, I have to use the land as part of the valuation for the sale so dividing it would take $40K off what I could ask for it assuming it is $1000 per acre.  I will pass on this one.

Thanks,

Chad Bilstein

Please forgive my post, it didn't come out as neat as when I wrote it. Since then I have found out an even better solution that will be almost $12,000 less to pull off. The numbers will adjust as bid negotiations happen. Still very interested in seeking the guidance of a mentor. Thanks and again, sorry for my ameture hour post. I'll get better. Chad Bilstein

So I paid my money for the very basic course with Fortune Builders and it is packed full of great information covering the basics.  I tried to find anything that would help on what I walked into, but to no avail.  I literally paid the bargain price so no mentor included.  

Okay, here goes, we have a housekeeper and she mentioned she is desperate to sell her house on 80 acres.  I went through the list of questions I've been taught to ask.

1.  What's your motivation to sell?

2.  Are you the only person on the deed?

3.  Your the mortgage holder as well?

4.  Tell me about your home.

5.  Do you know what is owed still?

That's when the strange happened.  So her motivation is she just wants out, the house partially burned and due to medical issues, she had no insurance.  (The fire department did far more damage than the fire, but not their fault.)  She is the deed holder and the decision maker.  The property has a barn that has had at least 2 additions added, it has a trailer house on the property as well, but the septic has to be replaced for it.  The son is working on that now using regular 500 gallon containers.  Not anywhere near code.  She had a deal with the guy she bought it from 6 years ago, but no official contracts although her name is on the deed.  She thinks she only owes $20,000.  Here is where it gets interesting.  The guy she bought it from was going to come to Colorado and make it official with a post dated contract (Her words, not mine) and told her she did only owe the $20K, but he died before he could make it up.  

Now the property is in probate and the children of the dearly departed told her she owes $54,000.  She hired a lawyer then fired her soon after over a payment dispute and because she was not getting anything done.  She did learn that even though there is no official contract, the deed is legal and she has every right to sell it.  It must be, she has a realtor listing it, but said she wants to fire him as well.  (I made sure she knew I could not advise her on that, I have no issues with working through a realtor.) 

The house, (If you can call it that,) is a total loss not only from the fire, but it really looks like something out of the Texas Chainsaw Massacre.  Its more of a shack on a postage stamp foundation.  It's only 960 square feet with 3 bedrooms and 1 bath.  I did a walk through and simply stopped writing down what was wrong because everything, "And I mean EVERYTHING has to be replaced."  

It would be cheaper and faster to demolish it, dig and pour a basement then buy a manufactured home of about 1800 square feet and spending $14K on giving the barn and out buildings a face lift, adding a gravel drive, landscape, plant trees, fix fence and sell or demo the junky trailer. Based on my current research it would look like this: 

Offer:                              $80,000         Based on land values and the only comp in a 10 mile area the past 750 days.

Demo costs:                   $10,000         For both house, foundation, trailer and some fencing and an outbuilding.

New full basement:      $8000            Plus or minus $1000 depending on the Double Wide Modular

Double Wide                  $115,000       Average higher end home with sizzle features

Landscape/Clean up    $14,000         Face lift on barn, clean up horse pens, fix or replace fence, add a gravel drive, plant 6 trees, add accent                                                                 plants and shrubs, place a 500 gallon buried holding tank for watering needs etc.

2 car garage                   $17,000         Add a 24 x 24 detached 2 car garage.  Help to increase the value a lot.

Holding Costs                $10,000         Plan on 18 month hold to sell.  My realtor friend said hold times average over 400 days in rural areas.

Total Investment          $254,000       Based on my repair estimate to just repair the existing home would have been $125,000.  Investment                                                                  would have been $269,000.

Interest paid                 $38,100         That is "if" it took the full 18 months to sell, based on 15%, could be lower maybe??

Final sale price             $350,000       Based on upgrades, a full basement a new garage and cleaned up property and other sales at $380K+

Closing/Title Fees        $10,500          Based on 3% if she does fire her realtor.  I am not sure here though, still learning.  

Estimated profit          $47,400          This could go higher the faster it sells.  

All of this was based on my research so far, I still need to determine the legality of buying during probate and how that works as well as nail down some of these costs.  They are all an average or prices given to me from a real estate friend and using my deal analyzer software.  According to Zillow, houses similar to what I am planning have averaged 375K on only 40 acres within 25 miles of this property. I can see splitting the land into one 40 acre plot and two 20 acre plots for future builds.

I'm obviously a novice and am still learning, but I feel like this is just not enough to risk it on my first deal.  There is no guarantee they will take my offer anyway, they turned down an offer for $120,000 last week.  My only defense will be the total I will need to finance to get this done.  Anyway, go ahead and rip this deal apart.  Be brutally honest, I need it.  I have until Wednesday to make an actual offer, but have plenty of calls to make to lawyers, the probate attorney representing the beneficiaries nail down actual bids for the ball park ones I assume here.  Oh yea, and start looking for private money as well as a rehab lender.  The hold time of 400+ days worries me.  Lots can happen with that long of a hold.

Sorry so long, 

Thanks,

Chad Bilstein

Thank you for the warm welcome guys.  @Tim Puffer, I am fully expecting to get a few punches along the way so no worries there.  I think the trick is to just be honest and thorough in respect to your contracts, be decisive and aggressive when you see an opportunity and never purposely screw anyone, things will work out. 

I see what you mean about there not being such a thing as passive income, I think your right to a point.  Rentals will always be somewhat of an active income with repairs, revolving tenants, the typical 7 year upgrades, (at least that is what I have in my business plan) selling and acquiring more.  It's passive in the sense that you can somewhat rely on a monthly cash flow so long as you qualify good tenants or rather your management company does.

I'll be out there soon, I kind of feel like I'd be only half way prepared at the moment.  I do have specific dates set to take action and move forward.  I will hold fast to them.  Anyway, great to be here.    

Greetings all, First time posting here.  I am so happy this website is here, I have read dozens of posts that were fairly helpful.  I have recently attended a Than Merrill event, pretty much a 3 day sales pitch, but I came out with a lot of good notes.  Not interested in the $49,997 for the Masters Program. Interestingly enough, they touted how proprietary the software was all weekend and it looked awesome. Then I caught it when the trainer typed in the name on his address bar as "Realflow," good catch because now I have that software and with all of the information on this site, my local REIA and the meet-up club i joined, I think I can replace their $49,997 coaching.

My long term goal is to get into wholesaling and to work toward buying rentals with anything I make off of the wholesale deals. If a deal comes along that is right for me, I will look into doing a rehab as well, but the numbers have to add up. I'm still getting my LLC set up and organizing my system for doing whatever I run into. Building my checklists, business plan for each type of investing. Setting up a quality credibility package so when I am ready, I can start finding my funding needs.

This isn't going to be easy, but I am in it for the long haul.  I have a good job now, I am looking to build this up to become what I do when I retire in the next 7-8 years and go full time.  I just hope I can get enough rentals in at the lower interest rates to short the dollar before the rates get too high.  My end goal is $4500 a month in passive income plus my pension.  If I do nothing but keep my business doors open and reinvest all my profits off of any deal and use any equity I gain to get at least 12-15 locked in over the next 7 years, I can get there.  Not going to be a walk in the park, but I see it.  

Anyway, that's my story.  I am glad to be here and look forward to reading everything I can and meeting folks here.  Happy hunting...

Chad

P.S.  I'll post my business info in my profile soon as I have it set up.