All Forum Posts by: Jason Chen

 No, the thing is that the issue with the plumbing was that a few pipes were just clogged up with gunk, which is common in Taiwan. Florida is hot and humid, and it can happen to smaller diameter pipes sometimes over decades. 

Some things to note was the fact that I was the 4th person to offer. The other three people were a little too ridiculous stingy. Im surprised not one just decided to offer an overkill bid of $225,000 just to steal the property right off the bat. This property is just one of those rare deals where the bank made a huge folly, and it probably took them a long time to realize what went wrong, especially when they could've seen that the property was suspiciously still standing two years later (the bank was very local). If the plumbing really was needing total replacement, it still would've been way undervalued.

I feel like the incompetence of bank employees might actually be a good thing, and we should all wish for them to make more mistakes in foreclosures in the future

how much did you negotiate off the asking price? property is aesthetically pleasing

 The lesson I hope to teach people here is that if there isn't any action going on, that alone shouldn't automatically compel you to make a move. All absurd events will happen eventually, and it's only a matter of time before a good one happens to YOU

My favorite part of your story was the fact that you decided to say **** it to the college route (which wouldve resulted you working at Starbucks for $9/hr most likely).

I've got no advice for you, but maybe we will encounter each other one day and do some business together.

I have an interesting success story to share.

A number of years ago, I posted about a 20 room motel in Central Florida that was a bank foreclosure listed for sale for $160,000. I ended up winning the property for $180,000, and there were three other bidders as well.

It was an excellent buy because the location was absolutely prime, and the condition of the property was more than fair (after repairs would've been done). The roof was ok, and most of the rooms still had good beds and appliances.

After a total of about $70,000 worth of remodeling, the motel was fully operational after 6 months of hard work. It only took 3 months before it was partially operational. The property required some plumbing work and drywall fixing for some of the rooms. Fast forward 4.5 years later, and the motel generates $165,000-170,000 on average per year before any expenses, and about $110,000 after expenses. The total cost of everything was $250,000, and I could easily sell it for $400,000 today.

In case anyone was wondering why the motel was listed for such an unusually low price, it was because the bank that listed it for sale actually thought that the property had to be demolished because the entire plumbing system supposedly needed to be replaced. This was actually not true, as it was only a few of the pipes in the bathroom that needed to be replaced for about $1,000 worth of supplies and labor.

THE BANK LITERALLY THREW $175,000 DOWN THE DRAIN BECAUSE OF A SIMPLE INSPECTION MISTAKE ON THEIR PART

I disagree, depending on what kind of motel you purchase. 

A 39 unit motel on the beach in Fort Lauderdale recently sold for 3.6 million dollars after being purchased for $465,000 in 1980. A 13 unit also very recently sold there for 1.2 million. The motel business is an insanely lucrative business when done right, but the problem is that most people just don't understand. It's weird because it's not a very complicated business.

Motels in a bad area of town are usually not worth it, but it still depends. It is usually the owner's responsibility to ensure that the property is as safe and as crime-free as possible. A few key steps is all it takes to reduce crime by a lot.

I'm going to make my response short and sweet:

Yes you should, and you'd be nuts if you didn't. Just be cautious as usual and invest in solid high cash flow properties and/or easy flips.

From what I've read, you're in a bit of a pickle and a slightly unique situation where the property that you own is in an isolated area with one big problem: NO COMPS.

All I have to say is that no matter what - don't screw yourself and accept crappy refi offers. Everyone knows that based on the interest of buyers on your properties, each of those triplexes can, at worst, be valued at $200,000 minumum each, and possibly $210,000.

This is a good example of an incompetent company who is bad at estimating things, and the customer gets shafted and cant get great refi terms. Why not just sell ONE of the properties for $210,000, and then BAM - you got yourself a recent sales comp right there!

I have 20+ years in the motel business. I was not aware of this until about five years ago, but apparently it is an unfamiliar niche category which VERY few people have extensive knowledge about. That is, unless you are Indian.  

I want you to step back and think about this deal you are thinking about getting into. You are paying $700k+ for a 9 unit rental that probably generates 50k-55k a year after expenses (but not loan payments). Essentially, you are going to be senile by the time you pay off your loans. 

Why people are willing to pay such massive amount for motels is a total mystery to me. I purchased a 20 room motel that generates 110k a year for $250,000 after repairs a number of years ago. That was an insane deal that is rare, but the truth is that the first key to running a successful motel business is to simply purchase it at a good price (which is insanely hard). This means that you're just going to have to pass up on motel deals that aren't somewhere close to the one I just mentioned.

A valuation of $250,000 for that motel would be fair for you, and if you were my friend, I'd tell you that for $225,000, you wouldnt be acrewed on that deal, assuming that there was very little renovation required. Anything over $325,000 for a NINE room motel is quite laughable, and can be career-ending. I've met lots of motel owners over the years who have paid $35,000+ per room for the $50-55/night kind of motels who are basically chained to their property for lifetime. Their real estate careers are over.

Avoid this bomb, but if they listed it for $150,000 you would be a fool not to buy it.