All Forum Posts by: Kevin Dougherty

All depends on what caused the flooding, was it a broken pipe vs. heavy rains that allowed water in via the roof or through the foundation. The broken pipe can be fixed quickly but the roof and foundations require extensive labor and cost. As to long term damage, did the water warp ceilings, walls and/or flooring? Did the water effect the electrical system, HVAC, hot water system or any other appliances? Make sure everything was dried properly so no chance of MOLD occurring. Best to have your own contractor review the damages to guide you through this. Your real estate agent or attorney can advise you any compensation that may be due.

Good Luck

Join the local real estate investment clubs in your area, they are usually frequented by licensed real estate agents, ask a couple of them their recommendation for a good program.

Good Luck

You can start by obtaining their last three years signed business tax returns and have a Certified Accountant review the information to see how health they are.

Please speak with your attorney and have them review the leases for each tenant then forward to each tenant an estoppel certificate verifying that the language in the lease is correct, there are no defaults, etc... Your attorney can assist you with drafting of the estoppel certificate. This should help you with refocusing the tenants to abide by the language already in their leases and have you start with a clean slate as to who is responsible for what.

Good Luck

If the ex wife is not paying the taxes, what else is she not paying... meaning a good title search for outstanding liens should be done first before proceeding. Check with an attorney as to that state's divorce laws, can ex-husband sell without her signature and does she want to sell??? Divorced situations present their own set of problems on top of the financial mechanism. If all that is owed is the back taxes, there is equity remaining and the ex-husband/wife can sell it then you might have a good deal.

Good luck 

Hi - My experience has been that smaller mixed use properties are always hard to keep leased, like @tylerBobo said. The smaller commercial units usually attract Mom & Pop types of businesses that are often times in business today and gone tomorrow so you are constantly turning tenants. The exception is when the location is in a well populated area with major foot traffic of people who have moderate to higher income levels and they frequent the businesses in the area. These types of businesses may have what is considered credit type tenants that have a strong financial statement, experience, business plan, bank references and haves signed the lease as a corporation and with a personal guarantee, etc... The Mom & Pop types may or may not be as strong financially. This by no means should be a knock at Mom & Pop types of business, as we all know they are the business back bone in most communities.

I did not see any expenses for the residential unit as well as the additional expenses for the commercial unit such as vacancy %, management %, repair reserves % and future capital expenses % (Cap EX). To be safe, allocate 20-25% against the gross income for both properties and then use the remaining numbers as the true NOI. The lender will also be looking at theses financials and will use them when they underwrite the loan. If you include all of these numbers in your loan package from the beginning, the lender will know that you have done your homework and that you understand how the property works.

Contact a local commercial real estate broker to see what the market is like as far as vacancy, credit tenants vs. non-credit tenants, demand for this type of commercial property. If it still looks like a good deal then consider a purchase. 

Good Luck

@Dylan Bard 

Speak to an attorney who writes these types of agreements as well as your accountant. Between the both of them you should be able to structure an agreement that can help you avoid costly land mines.

Good luck

Whats your plan for the property if you buy it? why are you interested in the property?

Since it was a mechanics garage do you have an understanding of the environmental conditions that come with this type of asset? Underground storage tanks, chemical seepage into the ground, etc... If you buy the property and there are environmental contaminants they would become your problem and it is not cheap to have them re mediated. If you are obtaining bank financing, the bank will more than likely want an environmental study performed, these studies can cost $1000's of dollars depending on what is discovered on the property.

Is there a need for this type of property in the community? What can you convert it to if there is a higher and better use and what is the cost to convert? 

Why is it vacant and why is the owner selling?

You could contact a local reputable commercial broker and determine if this property truly has value but do not waste their time, if they help you then give them the listing to lease the property if you end up purchasing. 

Good luck

Congratulations on getting started. First step is to obtain some basic knowledge of financing the types of property that you are interested in. There are plenty of great books right here on bigger pockets. Be sure to listen to the BP Podcast and follow the forums. 

Now to how the Private Investor makes their money. There are many ways this can work, they can partner with you 50-50 and maybe they supply the cash for the purchase and rehab and you supply the heavy lifting and find the property, hire and managing the contractors. When the project is completed and you either Flip out of it or BRRR it, you can split the proceeds from the Flip or from the monthly cash flow on the BRRR.

Another way is for the private investor to loan the money for the acquisition for 6 months to 1 year and they receive a certain % of return on the money that they loaned to you eg: they loan you $50,000 with and 8% return for 1 year so they would receive $4000 from you ($50,000 x 8%) plus you still owe them the original $50,000 that you borrowed. For further enticement the return could look like this: a certain % on their money for what is called a preferred return (they receive this before any profit sharing) and then they receive a % of any profits that the property makes in any given situation, Fix & Flip or BRRR.

There are many ways for this to work but you will have to understand exactly what your private investor is looking for in a return and you should provide them with assurance that their investment is protected as best as it can be via things like them having 1st position on the deed, promissory note signed by you for repayment, the property is purchased at such a discount that if you had to sell it in 30 days in its present condition, they would receive their investment back from the sales proceeds, etc... 

You will want to speak with all of the professionals on your team such as your lawyer and accountant to determine how to legally structure the transaction. 

I have not even scratched the surface here on how this all happens so its best to get educated. Join your local real estate investments groups, network with like minded people, read the books and listen to the podcast. Learn the language so you can get into the game.

Good luck.

Hi - Your best chance is to speak with other investors who are in your market where the property is located and ask them who they use.