All Forum Posts by: Caleb Chandler

@Chris Winterhalter

Thank you for the response to my post. 

I tried messaging you as I didn't want to bump the thread, but I was unable to.  However, I didn't want your response to go unanswered.

Unfortunately, the sellers are uncooperative, and they are unwilling to sell the land required.

Thanks again for the response.  

It seems like the only time that I get on here is when I am seeking advice, and hopefully at some point I can actually contribute some advice.  However, it seems I do need your advice again, and the knowledge on here always seems to get me through.  I hope this is the right forum.

We are in the process of developing a start-up business, and as part of our business plan, we need to identify real estate that will work for us.  We are meeting with the local Small Business Development Center to review our business plan tomorrow, and I know this section is going to come up.

We have identified a couple opportunities, and we are actively pursuing one opportunity.  Unfortunately, it is does not have the required space, but the owner does have adjacent parcels.  They are currently deciding on the price they would accept for them.

We were told by their representative we could purchase for $175,000.00, which we can probably get for $150,000.00.  We explained it wasn't enough land, they are willing to add an additional parcel for the $175,000.00,  However, I need the additional parcels to fit our business model.  The parcels are in a speculative investment area, and the price we anticipate them wanting will not be bankable.  We anticipate $150,000.00, which will include development of $50,000.00

We are looking to put in an offer for the initial offering, plus the additional parcel they are willing to include, for $200,000.00, if they would be willing to enter into a long term triple net lease with a 5 year purchase clause for the $150,000.00 and annually at $150,000.00 plus appreciation retroactive over 5 years.

I hope that is enough back story, as the advice I am requesting is what return on the NNN should I offer them? I have a budget of $36,000 annually for my rent expense, but in this case, I have a mortgage payment as well. In addition, I have a budget of $12,000.00 for taxes, which is 3-4 times what the current taxes are. (Like I said, we are trying to identify opportunities)

Secondly, if they would not accept this, I would to try identify an investor willing to purchase the entire thing.  How should I structure this to take to an investor?

Thank you for taking the time to read this, and for any advice you may have.

Hi all,

I have identified a property that I would like to make my first investment, if possible, and I am hoping to lean on the knowledge of the board.  

The property that I have identified is an REO that I have been led to believe I could purchase for 50% of the list price, if I could close quickly. I understand, the basics anyway, of how hard money loans work, but I am wondering if I could get some help on how to structure a deal.

I have been working as a realtor for the past year, after being laid off for over a year prior, so my cash reserves are limited, however, I have a strong credit score, and have about $20,000.00 in credit card availability.

What I would like to do is structure a deal that would cover my acquisition costs, and then have milestone draws to pay for the repairs after they are done, which would pay off my credit cards to free up reserves for the next milestone draw.

Acquisition Cost, including Closing Costs would be around $30,000.00, and I anticipate the repairs will run about $40,000.00.  A home in the same neighborhood recently sold for $98,000. which was the appraised amount.  However, it is not in the same conditions that the property I am looking at will be.  

Thanks for any advice,

Caleb

@Wayne Brooks @Joel Owens @Jay Hinrichs 

Thank you for your reply's.  

We will update if/when we receive more information from our professionals.

Thanks,

Caleb

 We are being very forthcoming that it is or was a 2010 - 2013 program, and the information would be provided throughout the due diligence period on this or the bonus depreciation.  Perhaps a bad term "offer", maybe I should have said passing on.   

From what we have learned through google searches, $500,000 was the max total, but again, we have told the potential buyer it is subject to approval.  Granted, the searches could be resulting in bad information.  

Good day,

First, we already have our accountant researching this, and with the window closing, we were hoping to tap into the tremendous knowledge on this board.

We are working on a project in which a developer is closing in on completion for a project, and we with a potential buyer.  The developer is allowing us to offer this project with up to $500,000.00 in accelerated tax deductions.  However, the best we can tell, this program was for the 2010 - 2013 tax years.  The developer believes that this program will be extended indefinitely, and we are told it has passed through the house and the senate finance committee.  They have also allowed us to offer between $300,000.00 to $400,000.00 in bonus depreciation if Section 179 does not pass.

Does anyone have any information about this program?

We are told that you may apply these tax deductions year 1, and may still use the standard deductions, is this correct?

Can anyone tell me what the bonus depreciation may be, and again, we are being told it could be used year 1 and may still use the standard deductions?

Thank you in advance for any insight.

@Joel Owens We have several listings available, but ultimately, I want to build a network of developers, investors and franchisees.

Over the past few days I have been reaching out to National Chains about some prime locations in our area, and it is virtually impossible to get them on the phone. I expected that. Site selection criteria is quite simple to find, and a general email to contact them. However, I don't expect to get anywhere that way.

Does anyone know a better way of finding contacts to reach out to?

Over the next few weeks, I will be looking for previous sales, and hope to contact the people involved to see if that helps.

In the past few months, we have had several hotels go up, and are getting our first national chain restaurant (sit down), so someone is knows how.

Thanks.

Thank you.

Could you approach it like this. First we determine the value of the land, and to do that we use a simple sales comparison. Since that is the HBU?

Could we then decipher the NOI for the potential effective gross income and capitalize it?

Could we then just simply add the 2 together?

@Joel Owens Thank you for your continuous advice. I think I am not clarifying what I am attempting to learn. I am not trying to talk about anything, only specifying the different thought processes. I am attempting to get a value on what this particular opportunity is the best for the seller, at this time, and under no duress. Perhaps not as an actual value, but the best approach to value the property, which admittedly, this market valuation will be evaluated different than other markets. I believe valuing a property should be done as the highest and best use the particular property would have, and in my opinion that highest and best use is a vacant lot. In my mind, I have established that. However, my peers are trying to add the value of the income being generated to the value of a vacant lot, and i don't agree with that. Others are trying to value as a non-conforming (residential ) lot in a commercial area. This has been discontinued. I may be wrong, and that I guess is what I am looking for.

For the record, I do see the value in the income, and perhaps weighting some of that in regards to the value. In the example of the land banking, perhaps you could value the lot, and adjust a percentage to the lot for land banking and add back the income value.

Edit: Is my thought process correct or incorrect? Is there precedent to add the value of income to the value of the lot?