All Forum Posts by: Darrell Lee

Hey peeps... I own residential and commercial properties in Vermont and New Hampshire including my most recent acquisition under contract of the Goodwin Community Center (aka GCC) in Claremont, NH. About 24,000 s.f. with a 25 meter indoor pool and a full size gymnasium that has two basketball courts. There's also a 7,000 s.f. brick house as well. Fits well with the East school I am buying in Springfield, Vt.

My original investment model was to buy and hold SFR's for at least one year and renovate the properties and then the transactions would be subject to long term capital gains or better still I'd do 1031 tax deferred exchanges and avoid ordinary income taxes. So I've bought about a dozen or so properties last year and most are in various stages of renovation. I believe my pro forma numbers are holding, but since I haven't tried selling anything yet, I have yet to confirm my projected profits. My goal is to build my asset net worth and get a solid return from those assets. Since all are under renovation, almost none are generating income.

My investment criteria varies, but while I planned to focus on SFR's the undervalued commercial properties keep getting my attention. The GCC was auctioned and I was the winning bidder paying just over $2.50 s.f. Tax assessed at $985,000 and my winning bid was $60,000. Being a tax exempt city owned property. By closing after April 1st, the property taxes will be set at the same amount as was due the previous year. So my tax bill will be ZERO. I was the only bidder to actually speak to the City Tax Assessor to confirm this so my thought was the other bidders were scared to go higher as the property tax bill on $985k is about $60k/yr. I just can't ignore former class A obsolete buildings being sold for $2.50-$7.50 per sq. ft.!!! Originally I had planned to buy 25+ houses this year, but these large commercial properties will suck up all my time and cash so unless I sell several of last year properties via exchange, I probably won't buy very many houses this year.

Sorry, I can go on and on...

I live in Springfield but I'd be willing to book a restaurant in Claremont, Nh for a Twin State REI meetup. There's a popular restaurant that has a $19 ribeye steak deal I'd like to try... Full bar too, but I imagine several will be driving and not want to risk drinking, unless we want to do a weekend daytime meetup.

If we set a daytime or early evening time and the meeting date sometime in late April, I could show you the GCC...

Excellent post. It is rare that a poster will give a detailed numbers account instead of the usual, I made X dollars with few if any details...  So normally I never respond to posts unless like yours, it is detailed enough to learn something from it.

I think the WTG posts if fine if you need your ego stroked, but they add nothing to the knowledge base of BP. I just wish more members would take the time to post truly informative posts with details that members can learn and benefit from.

Good. job.

Well, I have enough projects going that I have a construction foreman and all my workers are paid hourly. Fixed bid contractors mark up their hourly workers cost and add around 30% for their time and they have to add cushion so it can easily cost double/triple or more if you have a greedy contractor...

My brother insisted on doing work on one of our apartments himself to rehab the unit that rents for about $1200/month. It took him a year of weekends to fix it up. I would have hired a crew to paint and carpet it and do the needed drywall and other repairs and they would have completed the work in a month or less. So we lost $14k of rent when a crew would have cost about $1500 in labor and my bro charged us about $8k for his labor...

I'd recommend you hire workers in order to get the new property to a point where you can move in, otherwise if you are just working on it on weekends, it might cost you more in interest and lost rental income that trying to do the work yourselves will be more expensive.

I'm concerned for my workers safety... I just ordered a dozen hard hats and will require them to wear them when working on my properties where there is a danger of falling snow/ice. I'm also going to build covered entryways so as guests, workers and visitors should be safe when entering my upcoming project... A 12k s.f. school that I'm converting into my primary residence and company workshop and offices... The side and rear entrances are not protected and it would be very dangerous if large icicles dropped from the roof, 3 stories up... and the floors are over 15' tall each.

I plan to replace that ugly covered main entrance with 4 10' columns and a V roof using reclaimed slate tiles to match the buildings slate roof...

Maybe try http://www.visiolending.com/ I don't know if they will lend in Vt, but I know they are a legit company as I had bought a property from them in Bellows Falls and we closed it in 6 days.

I've bought many FNMA and Freddie Mac properties and most are not good, but some can be excellent. When they used a Vt atty things went smoothly and we even closed early. Others I've had delays for months...

My property insurance company will not insure a house with solid fuel only. One house I replaced a wood stove with a pellet stove and then added electric baseboard heaters. Cost is much lower than the $14k quoted to repair/replace the oil furnace and water baseboard heaters.

I generally try to retain the existing systems where possible.

My EMD is all part of my offer negotiation. I buy bank REO's. The house that ended up being my personal residence I really wanted as it was listed under $50k and the current fair market value was $150k. There was 10 offers on the house in the first 3 days so my first offer was full price all cash, 10 day escrow, $10k deposit. They countered asking for highest and best offers... So I offered $62.5k, $30k EMD, 10 day escrow which they accepted over other offers that were at least $10k higher than mine as one of the losing bidders offered me $75k the day after my offer was accepted.

Often times, the amount of the EMD doesn't matter, sometimes it matters a whole lot. Oh, I also included my bank statement which at the time showed a mid 6 figure balance showing them I'm a real, serious, qualified cash buyer.