Good points, Joel!
I had no intentions of buying until 2013, but this deal kind of fell into my lap through my networking.
The offer I put in on the second property was a situation where the current owners needed a quick sale. The City Chamber of Commerce owns it and is very anxious to get out of the property management business. Also, they are looking to move out of the building. The way they currently have it set up, they are paying all utilities (even though its all metered seperately), and there are 2 apts that they stopped updating that would be rented out with a little elbow grease. Also, there is another additional area that could easily be a 3rd apt with some creative layout.
My offer is very low, and I fully expected them to laugh me out of the building, but to my surprise, they werent scared off from it. Im waiting to hear back from one of the current tenants who has a lease ending in November. I wanted to gauge his interest in signing another lease or if he is leaving. That will ultimately be a deal-maker/breaker for me. I can lose the Chamber as tenants and still be profitable while rehabbing the other units, but if I lose BOTH of the commercial tenants, then the numbers become tighter.
The building is currently made up of the following:
3 commercial spaces currently rented (one being Chamber that wants to leave)
2 Apts currently rented
2-3 Apts currently needing updates to make rentable
Originally they were asking 80k...It quickly dropped to 72k...My initial offer was 60k contingent on the Chamber signing a 2 yr lease. They countered with 58k but refused to sign lease. Im going to counter at 50k once I find out if the other commercial tenant is staying.
At 50k, Im confortable taking my time and not feel rushed to get rehab completed. Of course I wrote in a nice long due diligence period so I could do several inspections and get my ducks in a row.
Man I am a long-winded dude.
