All Forum Posts by: Chris Dawson

@LyNetta Hill run away as fast as you can from this property!  You should never purposely get into a negative cash flowing deal.  I would, however, keep an eye on this property.  It sounds like the current owner spent way too much money on the property and it could turn into a fire sale or a foreclosure.

@Rick Novotny are you looking for a residential loan or a commercial loan?  I don't know of any residential lenders that will do a seller carry back after the financial crisis.  There were too many instances of mortgage fraud associated with seller carry backs.  Some commercial lenders will still do seller carry backs.

@Thomas Wolff, please send me the list of properties.  I might have some clients who would be interested in them.

@Chris Nance don't spend any money remodeling the building, unless it is a safety issue (leaking roof, stairs that are falling apart,...).  Commercial property doesn't have to look pretty to sell.  Anybody interested in leasing the property will know that they can negotiate any improvements that they want.

From the photos and your comments, this looks like it used to be a restaurant.  That location is definitely not the best location for a restaurant, but it would be a great location for a lawyer, CPA, title company, Dr's office, or something similar.  Those are the types of businesses your agent should be targeting.

Your lot looks very large for such a small building.  Have you checked how much the land is worth?  Would it be worth more without the building?

One more thought, you mentioned restaurant equipment inside the building.  That stuff is usually pretty expensive.  Have you tried to sell any of it?  There is a huge restaurant supply store in the West Bottoms in downtown Kansas City.  I don't know if they buy used equipment, but I'm sure they could put you in touch with somebody who does.

Good luck. 

@Tim Nelson you might want to check into a sub-metering company to see what it costs to sub-meter your water bill (or any other utility).  This is different and a lot cheaper than installing separate meters.  They basically install a water monitoring device for each unit and track the water usage.  You can also have them automatically bill your tenants for you or you can do it yourself.  If you don't want to bill your tenants, then you can still monitor the usage which will help identify leaks and heavy users.

http://www.guardianwp.com/ provides this service for KS and MO as well as 40 other states.  I have not used them before and I don't know what the cost is, but I do have a request in for a quote on a 4 plex that we are getting ready to renovate, so I will post back here what I find out.

@Mark Forest you need to find a new insurance company.  I had a house from 1887 here in Liberty, Mo and it was insured by Shelter Insurance for replacement cost.  It costs more, but it was worth it.

You may want to try talking to a different Allstate agent to see if your agent knew what he was talking about.  I'd be really surprised to learn that a company as big as Allstate doesn't provide an option for RV.

@Jason Bourne where is the property located?

@Jason Bourne, what city in Kansas is the motel in? In any situation where you have an under-performing asset, you have several options:

1) Sell the asset - You already stated that there are no buyers, but have you really tried to sell it? I don't see it listed on BiggerPockets. Is it listed with a local commercial broker? Is it listed on Loopnet and Xceligent? What about Craigslist? If you answered NO to any of these, then chances are you (or your listing agent) aren't doing everything you could be doing to get the property sold.

2) Improve the asset - If you can't or don't want to sell the property, have you thought about what kind of improvements you would need to make to the property to make it perform better? Before you can answer this question, you need to figure out exactly WHY the property is not performing.

Is the problem physical depreciation? If so, do you have the money to fix it?

Is the problem functional obsolescence? If so, it can probably be fixed, but it could be cost prohibitive.

Is the problem economic obsolescence? If so, this would be the hardest to fix (I'm not even sure you could fix it).

Is the problem poor management? This could be a touchy subject. If you suspect this is the case, you would probably need to hire a third party consultant to review the entire operations and determine the problem.

Once you figure out which of these is your problem, find out how much it will cost to fix it.  Can you afford this?  If so, move forward with correcting the problems. 

3) Talk to the Bank - Find out your options with the lender.  Can you refinance with lower monthly payments?  Can you make interest only payments for a period of time?  You never know until you ask.  Are you current on your payments?  Sometimes the banks don't become cooperative until you get behind in payments.

4) The Last Straw - If you have exhausted all other options then you might just have to walk away from the asset or depending on how your company is set up, you might have to file bankruptcy.  Obviously you need to consult with your financial adviser before you make this decision as it will have long and sometimes lasting affects on all parties involved.

I hope this helps.

@Edgar Estrada, Kansas City is also a great location for small multi family properties.  Have you tried looking for multi units in KC?  I know of several 4 plexes For Sale in good areas of KC (areas I wouldn't be afraid to walk alone at night), priced between $200k-$400k.

@Christopher Krauth welcome to BP. I would suggest you attend a local REI meeting to meet other wholesalers and lenders. Winvestors and MAREI.org are 2 good, local groups.