All Forum Posts by: Charles Kao

@Jack Martin While I agree with your comments in theory, in reality everybody buying on market deals is generally overpaying to get the property with each property typically setting a new all time high, unless its a property that was priced to high and interest has dropped off. If this were an offmarket deal thats one thing but seller is going for top dollar in most situations. While I would not advise this in all markets I do let my clients know that certain markets I am comfortable with this because the demand and potential are high. I have clients that “overpay” based on market comps only to see 1-2 years later that the market has gone way over what they purchased for. I 100 percent agree however on the principle that if your desired return is met to buy but buying on market is rarely going to result in you not being underwater for the short term. We bought a property offmarket with still

multiple buyers we projected a conservative 6 percent first year return and due to market dynamics and running the property even more efficient that we expected we closed on the resale of property just under 14 months later with an over 200 percent return to our investors.

The fundamentals of the area were so strong that we reset market rents and our competitors soon followed.

@Joe Splitrock

38

@Loren Souers There

are plenty in the bigger pockets fileplace. Personally for me I know lawyers will say one thing but if you have to enforce a contract in court everybody loses. I rarely have somebody back out but going to court has never been the best possible solution so I would not suggest a lawyer drawing up a contract. You want a contract that is easy for the seller to read and ideally will not involve a lawyer to read for them. Alot of times when the seller has had a lawyer review the contract the lawyer will say thats too cheap or hey list with my friend who is a realtor so I like to make it read very easy because you could lose the business. My sellers place trust with me to do exactly what I say a quick easy sale and I am putting my trust in them to follow through with their word after signing. If they really want to backout because they change their mind about selling I normally just let them because I don’t want to be the guy that took a seller to court. Just another opinion to throw out there.

@Erica Husted

First I would make sure you check with multiple lenders. I know lenders that with do no doc loans granted at a high interest rate but if you have a very high downpayment you likely could get a land contract

@Montez Blackburn

Really depends on area but based on the growth of jobs and in the three youngest generations and affordability I would say Grand Rapids Metro.

@Tariq Sabbah You want to value the property on a square footage but also with an idea of what proforma will look like and what CAP rate a NNN tenant would attract. If its a Class A tenant like a Starbucks or corporation that guarantees mortgages thats a big difference from site that attracts mom and pops with all more concerns on vacancy as well. Your CAP rate is going to be reflective of the tenant you can attract because of the risk you are willing to take.

@John Kim

We do 1/4 of facility at time with prices to market or very close. Letter that goes out that is automated is along lines of but a little bit cleaner wording:

Dear [customer]

Thank for being a loyal customer of [storage facility] since [move in date]. Currently the market rate for your size unit is [market rate] and we currently have a waiting list. While we have to raise the rents on your unit we wanted to reward your for your loyalty by offering you a discounted rate of [new storage rate]. This new rent will take effect on your [next billing date more than 30 days out]. If you wish to stay you need not do anything. We hate to see you go but if you do decide to we hope the extended noticed provides more than enough time to make other arrangements. Thanks in advance

Storage Facility Staff

@Jackson Nguyen

Next Door Title

@Nick Paquet At $1000 what are is your alotment for CAPEX, vacancy and property management?

@Joey Hicks Sales and leasebacks very common with these properties. Its like flipping a house to themself to free up cashflow.