All Forum Posts by: David Hollenberger

@Joe Villeneuve

Message received.. thanks for the encrypted synopsis.

Hey everyone I am new to REI however I have an opportunity to get my first commercial deal under contract. I have an off market deal that I have very close connections with the individuals who own/operate it currently.

I connected with a local commercial broker/ investor in my area and I told him about this opportunity. I explained the situation and how I’d love to buy it but don’t know the ins and outs or have the capital right now. The investor brought 2 more investors he knows into the group to help purchase this property.

The deal:

Mixed use commercial building

Purchase price around $800k (still negotiating)

ARV $1.3m

Renovations: Repairs/cap ex $300k

I know those aren’t all the numbers but hear me out. I brought the deal to the now group but I don’t have any capital to put into the building. My equity in the building would be made up of bringing the deal and acting as boots on the ground building manager type roll.

Investor 1 is the commercial broker he would be handling the lending and providing 1/3 of initial capital

Investor 2 owns a construction company which would be taking care of the renovations and providing 1/3 of initial capital

Investor 3 would be providing 1/3 of initial capital.

The plan is to do the renovations needed to get the building updated and the spaces utilized more efficiently. While fixing poor management and easing rents where needed. We hope to refi by the 18 month mark. Upon refi the investors should be able to get most if not all their money back out of the deal. (This plays a lot into my thoughts on the splits)

At a meeting we had the discussed equity and cash flow splits. They offered me 5% equity and 5% cash flow while the other 3 split the rest evenly. This kinda seems like a slap in the face to me.. I know I’m new and this is my first deal but that seems low.. I feel like bringing the them the deal should bring at least 10% on each split and then being the manager of the property should be worth more than 5% itself also..

Their reasoning for my lower % and their higher % is due to the upfront capital.

With that said, Am I being taken advantage of or is this what to expect??

I have my first duplex under agreement but I’m not sure what to do with the tenants. Both units are currently rented and will still have over 8 months on their current leases. Both units are almost $300 under market rent. These are both turn key units so not many upgrades would need done to get market rent. The current leases do have a 60 day vacate option I can use when I take over.

What would you do if you were in my position?

Am I over thinking the situation or is there a strategy to use keep everyone happy?

Thanks in advance for the feed back.

@Mason Hickman

I think she’s hesitant because she grew up not having much and now that we have a family and are living a good life and having success at it she is afraid to lose it by a deal going bad. She’s afraid we will buy a place and rent it out and the tenant will not pay because of the covid crap. It’s a work in progress with getting her on board but she is reading rich dad poor dad now and I think the mind set is starting to click for her.

With the new extension to the eviction moratorium my wife is having a hard time getting on board with buying rental properties. I have spent the past 2-3 years reading a learning about investing in real estate and I finally got my wife on board (for the most part) but now she is questioning if we should buy now with the moratorium extension.

What can I tell her to help ease her mind? I know it’s a risk to take but damn I think the reward can far out way the risk if you do it right.

How common is it out there to have tenants take advantage of the moratorium?

Is there any assistance for landlords dealing with it?

I’m new to real estate investing and love the idea of commercial properties. To make a long story short, I have a lead on a commercial property in Pittsburgh, Pa. Its currently owned by a non profit and they have indoor climate controlled storage units in place and rented, a store front with tenant in place, a vacant and gutted second floor that could be finished and rented (probably about 2000-2500sqft) and a banquet hall with full kitchen and bar that has a max cap. Of 500 people. I’m looking for a partner that has the knowledge and know how to structure the deal and gain a new ready to grow investor under their wing. The potential is huge for this property.

I am searching for my first investment property and I viewed one the other day that has a lot of potential but I’m nervous that it might be a bit much for my first property. I’m looking for a “what would you do” response.

The property:

4 plex stacked built in early 1900s

Basement apartment with entrance at street level in the back.

First floor apartment on street level in the front.

Both top apartments are accessed through interior stairwell.

All units are 2 bed 1 bath. And the top two units have a deck coming off the front.

The top two units are both vacant and have water damage from a leak in what seems to be the roof.

There is a definite slant to the building in which the center windows on the top two floors have about a an inch difference in the gap between the window and window seal. Some water lines leak in the basement and possibly throughout. Electric seems to have been updated and it seems there has been a new gas service coming into the building but the meters and some internal piping may need replaced. Top two floors are definite gut jobs to joists.

The first floor is still occupied and we were unable to get into the apartment during our viewing. And the basement apartment is also occupied and needs updated but doesn’t seem to be a complete gut.

The cash flow potential for the building could potentially be around $1000 a month if over purchase price and rehab were on target.

Do you think it’s worth trying to move forward or leave this one go since it would be my first property?

@Jaysen Medhurst

My plan is to add value and cash flow I guess I’m just unsure about finding/using a hard money lender or other private funding when necessary.

I am getting a 50k HELOC on my personal residence that I will be using to jump start my real estate investing career however, im just curious to what everyone would do with it if they had it. To help paint the picture in my market you can buy 3-1 sfh in class c to c- neighborhoods for 20k-40k or 50k-80k in c+ or b- neighborhoods. B neighborhoods would typically be 80k and up. Personally, I will be making my first deal in the first half of the year but I am having a hard time deciding what kind of price range and area to start with. The C range I would most likely pay cash with the HELOC and try and pay the property down as fast as possible to repeat the process. The C+ or B- and B areas would most likely be a combination of my HELOC and a partner. I have run the numbers on houses in each of these markets and believe I have some deals waiting for me if I could just pick a strategy. Let me know what you would do if you had a 50K HELOC to start!

I am currently doing a seller finance with my parents. I bought their house as my primary residence. In my current market I believe I got 40k in equity off the top. I am looking into doing a HELOC to purchase an income property but I'm not sure if that's the best route or if I can even do that since I'm in an owners finance deal. I currently have a 5 year contract that i have to refi the home before it expires. A question i have is with the talks of mortgage rates going up in the near future do you think I should refi sooner rather than later or is there another more creative strategy out there?