All Forum Posts by: Joe Doxsey

@Daniel Ahern I am a commercial broker specializing in investment properties in the Cincinnati area.  Thanks for the poke @Nick L.  

Can you give me the address and some additional information on the property (type, what issues exist/cost to fix/rehab plan)?  

This question is highly dependent on the area, the property type, and the reno cost.  I'd be more than happy to take a look at this though and let  you know if it makes any sense or not. 

You generally wouldn't expect 15% occupancy anywhere in our market on any type obviously, but we do consistently see that on distressed assets, perhaps mostly on industrial types that are out of code and tenants can't get CO's for without either the owner or tenant spending significant sums of money on rehab/environmental.  Sometimes that is worth doing, sometimes not.

Like most areas we are seeing a lot of inner city and first ring development as well.  A lot of people are choosing to not invest in low occupancy and obsolete properties and hold them as a future development option.  This may or may not be something going on with the property you mention, where its natural use is unfortunately to sit at low occupancy and minimal cost for a few years in the hopes its worth spending some major money on in the future.

Let me know how I can help,

Joe

@nathan visser - NP

Just a quick tip, but when you identify the type of property you are targeting (say small multi family in some metro) start requesting investment packs on all the listings out there.  Save these.  

Comes in super handy when you are trying to estimate expenses to have 20 examples you can jump through that are similar properties.

Most properties are advertised on pro forma, which is typically "a good guess that commonly contains much ******** to make it easier to sell".  You should trust them as far as a quick introductory glance at the property, then not much else.  

You verify numbers by tax returns, tenant ledgers, etc.  You should also be, or become, familiar with typical operating expenses for properties in your area.  This will help you quickly identify numbers that do not make sense (which can be opportunities to add value).  

They need to give you a break down of those expenses for the last couple years, and you go can go from there.

 I came here to point this out.  Even if they don't file a foreclosure on your other property you still risk garnishments of your pay check and bank accounts.  You need to talk to your attorney about what realistic damages are here, odds of settling, and if bankruptcy is something you need to look at.

At least here the conveyance documents state this.  You don't even have to pull them from the recorder, they are on the auditor's site.  regardless of that you can check if there is a mortgage recorded on the recorder's site.  Because they are insane you can't view it, but you can see one is filed.  Get familiar with your counties public websites.  In most places you may not get all the info but you can get most of it pretty quick.

Sean-

Thanks for posting this.  I have tons of questions!  Can you let us know what types of properties you lend on and the more or less standard terms?

 NP.  Something else people always screw up on seller financing is going too long on term.  If the deal is right you should have a plausible exit strategy to refi in 5 years or so.  

Ask question and listen to them.  Then explain how you can help them.  Then propose how you will do so and let them know how quick they can finalize the entire transaction.

IE.  wow that must really be hard to drive an hour every time you have to come to this property.  I'd be tired of that and want to sell it to.  Congrats on the retirement.  I hope I can help you get some cash to take your wife on that trip to celebrate.  I can't pay for the entire property in cash right now and financing is tough as I'm sure you know, but I can do $x right now as a down payment.  That should take care of your trip.  I can then pay you $y a month for the next 5 years then I should be able to finance this out and pay you the $z that would be left.  If you can work with me a bit I think this would be pretty great for both of us.  I can have my attorney draw this up and get it done pretty quick.  How long do you need to talk it over with the wife and make a decision?

Works a hell of a lot better than "Hey have you heard of seller finance?  I'll give you $x now than $y a month later?"

 Ask them what they are hoping to achieve with a sale and why they want to sell.  What do they owe?  Do they need immediate cash?  If so how much?  Make it about them and listen.  

Get him in as much 4 family as he can afford under an owner occupied FHA asap. He will thank you when he moves the hell out of that and has a great property to star this portfolio with a minimal down payment.

 In case anyone was wondering, this is pretty common.  I practice in multiple states under my Ohio license.  I know some people that practice in like 5+ states under one license.  Generally speaking, consumer protections are reduced greatly for commercial as a typical transaction involves an attorney for the buyer and the seller and you are dealing with executive level clients who are more educated on legal/real estate matters.