All Forum Posts by: Chris C.

Hello PB,

My Partner Mike and I (Chris) are moving steadily through our first deal. We acquired through seller financing a two-story mixed use commercial property totaling 8,000 sqft, located at 77 South Street, Bethel, CT 06801. The seller also owns the house next door which we worked into the contract a 2 year first right to offer option (expiring June 15, 2020). The plans are to use the second lot as a parking area since parking in Bethel is considered a premium in the downtown area. The note of $1.79M reflects the total needed to secure the property next door ($200K), paying off the principle balance on the note for 77 South Street ($240K) and all estimated expenses to build out 14 apartments. My background is heavy in finance, accounting and supply chain while Mike is an established architect who works for a one stop shop construction and design firm. We are posting today to get some feedback on our cash flow model (pictured below) and some advice or guidance on the obtaining cash investor(s) to fund the 20% down payment needed. The model is reflective of 6 years rolling. Year one assumes construction beginning in May 2019 and concluding in September with the apartments being available to rent by October 2019. The cash flow is based on 90% Occ. for 3 months (Oct, Nov, Dec) in the first year. The expenses are a bit conservative in years 1 and 2. In this scenario would provide all of the cash flow for the first and second year directly to the cash inventor(s) which is $28K and a full loan repayment through a refi in early Q1 of the third year. Since the expenses are a bit heavy, we are estimating a rate of return of 8-12% and a full principal payback in the year following.

We are open to any suggestions and thoughts

My hope for this post was not to provide paragraphs which is why it is a bit short and to the point. We can provide the CAD drawings and layouts of the apartments, the additional tables making up the estimated expenses and taxes. We can also provide an aerial layout to show how close young professionals would be to the downtown area with a microbrewery across the street. We are firming up the construction budget with subcontractors and will have that in the next few weeks. We will be meeting with Planning & Zoning to gain their approval of the project by next week.

Good Afternoon,

My Partner Mike and I (Chris) are moving steadily through our first deal.  We acquired through seller financing a two story mixed use commercial property totaling 8,000 sqft, located at 77 South Street, Bethel, CT 06801.  The seller also owns the house next door which we worked into the contract a 2 year first right to offer option (expiring June 15, 2020).  The plans are to use the second lot as a parking area since parking in Bethel is considered a premium in the downtown area. The note of $1.79M reflects the total needed to secure the property next door ($200K), paying off the principle balance on the note for 77 South Street ($240K) and all estimated expenses to build out 14 apartments. My background is heavy in finance, accounting and supply chain while Mike is an established architect who works for a one stop shop construction and design firm.  We are posting today to get some feedback on our cash flow model (pictured below) and some advice or guidance on the obtaining cash investor(s) to fund the 20% down payment needed.  The model is reflective of 6 years rolling.  Year one assumes construction beginning in May 2019 and concluding in September with the apartments being available to rent by October 2019.  The cash flow is based on 90% Occ. for 3 months (Oct, Nov, Dec) in the first year.  The expenses are a bit conservative in years 1 and 2.  In this scenario would provide all of the cash flow for the first and second year directly to the cash inventor(s) which is $28K and a full loan repayment through a refi in early Q1 of the third year.  Since the expenses are a bit heavy we are estimating a rate of return of 8-12% and a full principal payback in the year following.  

My hope for this post was not to provide paragraphs which is why it is a bit short and to the point.  We can provide the CAD drawings and layouts of the apartments, the additional tables making up the estimated expenses and taxes.  We can also provide an aerial layout to show how close young professionals would be to the downtown area with a microbrewery across the street.  We are firming up the construction budget with subcontractors and will have that in the next few weeks. We will be meeting with Planning & Zoning to gain their approval of the project by next week.

We are open to any suggestions and thoughts

Update 10/29/18:

With the building having a 4 1/2' x 121' sign board running across the middle facing the MTA train tracks and a microbrewery, we are working on having the town approve OOH advertising for a short period of time (6-9 months). We have already lined up a printer and advertising company who can help assist selling (16) sixteen 4’ x 6’ signs.Their pricing model is an initial $120.00 per sign (one time cost to make it) and then 20% commission of the total list price from the clients that they find us.We would sell 3 month bundles.

If we can achieve this initiative then we can cover the cost of the monthly mortgage, insurance and the quarterly taxes without being out of pocket. Any profit that is left over will go into our non-for-profit charity – Neighbors Help Neighbors (based in Bethel, CT).

Hello Brandon,

Thank  you very much for all of the resources.  I will check out all of the links right now!

Update: 

After speaking with some amazing professionals who I have recently met on the bigger pockets forum, we have decided to stick with a bridge to perm loan. We have teamed up with a local commercial broker who understands our market in Connecticut and may have found an interested brewery who is looking to expand to a larger facility. We are hoping to have LOI's in place within the next 2-3 months which would reflect a 10 year lease commitment. Once the LOI's are in hand, we can begin to shop loan rates and then provide an investment package to begin raising the needed 20-25% cash needed to begin the work and to cover the interest only payments.

Estimated Gross Revenue would be $224,000 ($28/sqft at 8,000 sqft).  We are forecasting to have an annual net return (less mortgage, utilities and general prop maint) of $85k.  We will use the net rev to pay back our investors for the first two years.  Year three we would like to refinance the property and pay the balance due investors through the equity plus get a lower int rate for the property.   

Correct, we do not have enough cash on hand to put down to start the construction. Our construction budget comes to $1.2M to renovate the existing building, demolish the barn and the multifamily to create parking. We are looking to include the $240,000 to pay off the seller financing on the 8,000 sqft building and another $200,000 to buy out the multifamily. We are looking at a construction loan for $1.64M. Knowing that we need 50% occupancy through LOI, we are working with a commercial broker who is showing the property to a number of large franchises looking for space. $410,000 is needed in cash (25% down against the $1.64M). Since that number might take some time to get through private investors, I was thinking that if we can at least finance the 8,000 sqft building through a traditional loan it would provide us time to evaluate all of our options. The loan would be for $240,000. Since we paid the $60,000 in cash, we should have 20% equity using the purchase price of $300,000 as the assessed value since it has only been 4 months from the date of purchase.

Thank you for your advice, I will look into a short term bridge/construction loan and what the overall process is.

My name is Chris Campanaro. My wife, Samantha and I moved to Bethel, CT 06801 3 years ago. It is here that we decided to get into real estate investing. We both work a 9-5 and run several side businesses and a non for profit (alongside our 8 month old - Ava).

I currently work as a Director of Global Procurement for a mid-size company in Stamford, CT. My direct reports are spread throughout North America, Europe and Asia making my 9-5, a 24/7 job. I made a career change one year ago from being an accountant (non CPA, but worked in various roles over 10 years) to supply chain. I have two college bachelor’s degrees, one in Business Management & the other in General Accounting. My wife is a special education teacher in Ridgefield, CT and holds a bachelor and master’s degree. She also tutors privately weekends and some weeknights. We both own and operate a successful antique business on the side (which helps to pay some of the real estate costs). We also created a non-for-profit charity in Bethel named, Neighbors Help Neighbors which has helped several family so far maintain safe and sound homes while improving their property values.

After a friend of ours turned us on to the BiggerPockets Podcasts, we decided that we need to readjust our life goals and align our decision making to get into real estate investing. Over the last 3 years, we have educated ourselves, adjusted our spending habits and knocked down our debt. I moved through several jobs to achieve an 81% increase in gross salary, knowing that we need to keep increasing our cash flow. In May of 2018, we landed our first deal - a two story, 8,000 sqft building located in Bethel, CT. The purchase price came to $300,000 and includes a 1,500 sqft barn. Additionally, since the seller owns the multifamily next door we built a (2) two year first right to buy/offer clause since we need the lot for parking. Finally, we were able to achieve seller financiering (3 points over prime) which came to a monthly mortgage of $1,714. We are currently working with a construction company to help put together a total budget, a local bank to help finance the construction loan needed and the town for zoning permits. Once all this is solidified, we need to work on finding cash investors to help seal the deal (this is only for information purposes – not soliciting cash investors)

To top this all off, the property is noted to be the first Smirnoff distillery in the United States during the 1920's. The rich history of the building continues as several woodworking shops and a famous Halloween mask making company (Top Stone) once occupied the facility.

We had no intent of having our first deal be so large (mixed use commercial) but an opportunity presented itself and we ran with it. Since this is a new venture for us, we posted a question on one of the commercial property forums.

We are excited to be part of this amazing community and look forward to all the resources it provides.

My wife and I spent 3 years looking for the right deal. Through proper planning we were able to close on our first mixed use commercial property. The property is vacant and in need of renovations (all of which is accounted for through a construction budget). The property is a two story, 8,000 sqft building including a 1,500 sqft barn (which will be coming down). The seller also owns a multifamily property next door, which we worked into the deal to have a (2) two year first right to buy/offer option. This will provide 35 parking spaces once the house is demolished. The transaction was seller financed which reflects 3 points over prime and a monthly mortgage of $1,714. We secured the property by providing 20% down ($60,000) as the property cost was negotiated to $300,000. The current balance is $238,000. My question is, can we refinance the property with a bank for a traditional loan? If so, will that impact our application for a construction loan?