All Forum Posts by: Derek Magdziak

All good advice from everyone - bottom line is to stick with the basics, meet with the owners and be direct with them.  Thank you everyone for your time. 

How can we approach a bankrupt owner of a great commercial property to sell without being too pushy?

Here is bit of color to the situation - there is a property that my partners and I are interested in purchasing, sitting idle and not being used for anything.  The family that owns this property unfortunately had to close down their business last year due to COVID.  I have sent a hand-written letter to the owner about a month ago and plan to send a second letter next week, but I would imagine that since they went bankrupt, since they purchased this property in the early 1900's, and since they own a good chunk of real estate on the Main Street in this small town (that is not likely cash flowing enough to cover the expenses of said property), that they are still reluctant to sell and still can't believe the situation that they are in.  But of course, that's conjecture on my part.

My partners are especially eager to purchase this property and they want to find a way to accelerate the purchase or even lease option the property.  

Thus my question above - how could we approach the owner and family without being too pushy?

Thanks in advance.

Integrity

@Kevin K.  Thank you for your thorough explanation, and for the two pics!  That does make sense to me.  

@Erik Hatch You make a great point that financing could be difficult to obtain in properties that do not have any tenants.  Totally agree with you that it'll be an uphill battle.

@Brett Peters Negative cash flow certainly is what I am strongly concerned with... and If the numbers don't work, then I have no issues walking away form my analysis (I have not submitted an LoI yet to start any negotiations, but it is an interesting property to analyze nonetheless).

Thank you all!

When evaluating a multifamily property (5+ units), one would determine the actual property income (the total income the property generated in the prior 12 months) and use this calculation as part of the calculation for the NOI and the purchase price.

If one comes across a property that is a completely renovated multifamily commercial property but has no tenants, should one focus on using the actual potential income of the property (meaning total income the property could have generated assuming 100% occupancy rate over 12 months) since the actual income doesn't exist to calculate the NOI and purchase price?

Thanks in advance.

@Russell Brazil, totally agree with you.

I’m comparing the market crashes in 1929 and 1987... the DOW charts certainly resemble to what is happening at the beginning of the drop.

Though no one has a crystal ball, both charts show that it can take quite years time to get though the choppy parts before a uptrend begins again. We’ll see how this crash works out.