All Forum Posts by: Nathan Joens

Hey BP,

I needed some quick advice on a property that has some unique aspects to it, both negative and positive.

Let me start with the basics:

• Property Asking Price: $35,000
• 2,218 Total Square Footage
  • $15.78/SQ FT
• 4 Bedroom, 4 Bathroom unit
• Currently set up as a 4 unit rental property
  • 1 Two-Bedroom Unit (median rent in the area for Two-Beds unit is $681/month)
  • 2 One-Bedroom Units (median rent in the area for One-Bed unit is $544/month)
  • 1 Studio Unit (median rent in the area for Studio unit is $485/month)
• The property needs to reapply for rental certificate to rent
• Property was last assessed at $47K in 2014
  • In 2013 property assessed at $118K

Some Positives:

• With 4 beds and 4 baths, the property would be a great single family home for a family
  • Located very close to a school also
• The price per square foot figure is very good
• Exterior is in relatively good condition
• Previous assessment LAST YEAR valued the property at $118K
• Corner lot

Some Negatives:

• I am not sure how much  money needs to go into repairs - here is what I do know:
  • The property has some black mold on the interior
  • Part of the upstairs bathroom is leaking and now caused the floorboards to rot and begin to weather to the point of a sagging living room ceiling
  • Would most likely need to remove a bathroom in the situation that it would be "converted" back to a SFH (4 baths is a bit excessive)
  • Property has 2 "kitchens" (I use kitchens lightly because the upstairs "kitchen" isn't much more than some cupboards) but one would need to go.
• Repair costs will not be cheap

I need your help BP: 

• Tell me if I am in over my head on pursuing this property. 
  • If I am not in over my head yet, what is that threshold point where I have 'lost it' and need to give up on this property. 
  • I also need your expertise to help my decipher what to do with this property - would it make sense to rearrange it back to a SFH, or just to leave it as it is currently set up, apply for a rental certificate, and rent it out? 
  • Finally, what is the best way that you have all found to estimate repair costs (I am a quite the newbie in this sense so keep it beginner level if you can please)

Thank you for all your help, and if there are any more figures you need from me just let me know

@Wayne Brooks The sale last year was a cash sale for $5,310,500 from an outside investing company to American TV and Appliance of Madison Wisconsin, making them the current owner and once occupier of the building.

I spoke with the listing agent on the property and he said:

• The sale of the property last year was arms length
•  The estimated rent for this property could be around $5.50/SF/YR  
•  The replacement cost for this building would be about $110/SF.

I would agree that the current asking price for the property is a little bit "greedy".

Do you think that the price could be significantly negotiated down due to the fact the current owner of the property is out of state and out of business and only losing money right now by having this property under their belt?

Also, have you ever personally dealt with changing the use of a property which could be a possibility for this property or dividing a large property up?

Thank you for all your help.

@Jim Sokoloff is right the $49/SF is the current asking price figure for the building and the $12.32/SF/YR is the median asking rent for retail in the metro area.

Is that $12.32/SF/YR figure applicable to use here? Or would the pro forma rent be much lower because it is one of the largest retail buildings in the area?

Hey BP,

I was hoping you all could give me some guidance in creating a CMA for a prospective property. The property is a large 'Big-Box' retail warehouse that is one of the largest properties in the surrounding area.

What are the best comps I should include in my CMA relating to this property?

If I am having difficulty finding similar buildings in characteristics to the prospective building should I expand my limits on the region I am including?

Thank you all for your help!

@Steven J. thanks for the response! My primary goal for the club is to grow interest in real estate in general around my campus and hopefully throughout central Iowa.

Central Iowa isn't exactly bustling with investors so I hope to really be a 'go-to' figure on my campus for all things real estate and I hope my club serves to reflect any and all interest related to real estate.

As for this property I have really tried hard to put together a CMA but I am having a tough time finding properties that are relevant enough to this particular property to include in the report...do you have any advice on that - what types of comps would be pertinent to go into the report?

Thanks for your help sir!

Hello BP,

I am a college student from Iowa who started a Real Estate Investing Club on campus and for my first club meeting I want to make a great impression on my club members by giving them a concrete case study that we can work through collectively. Before the meeting I wanted to get a wide range of views on the property that I have chosen for that case study as it particularly hits home for myself and as a BIG deal...literally.

The biggest focal point I want to pose for the club is who or what could go in the building? Which tenants would best fit the property or what would be the best use for the property?

Have any of you ever dealt with an empty large building and if you have what became of it?

Here is what the prospective property for the case study is like:

• Large commercial Big Box retail property (its a BIG place)
• Located in the suburbs of Des Moines, Iowa
  • Des Moines is one of the most up and coming business hubs in the country and is bustling with growth.
• Former American TV and Appliance store
  • They are the current owner and went out of business in this location about 5 months ago
• Directly off the interstate (I 80 35)
  • *** FUN FACT - Des Moines is the only place in the nation where Interstates 80 and 35 conjoin ***
• Directly across from a business park
  • Includes a hotel, restaurants, office space, a movie theatre, grocery store, bars
• Near residential neighborhoods as well (adjacent to my house)

Here are some of the numbers on the property:

• Asking Price: $7.2 M
• Previous Sales Info: Sold in 2013 for $5,310,500
• 146,003 Total Square Foot
  • $49/SF
• 10.21 Acres
• Year Built: 2000
• Current Assessed Value: $9.2 M
• Current Tax Information: $371,976 annual payment (EXPENSE)
• Water Payment Information:
  • Summer Months: $3000 (EXPENSE)
  • Winter Months: $400 (EXPENSE)
  • TOTAL EXPENSE UTILITIES: $450,890
• AVERAGE RETAIL RENT - DES MOINES METRO: $12.32 / Square Foot / Year
• PROSPECTIVE PROPERTY AVERAGE ESTIMATED RENT: $1,798,756 / Year
• ESTIMATED CAP RATE: 25%
  • Based on previous sales price during 2013 of $5,310,500

I wanted to first of all make sure I calculated these numbers correctly and wanted to get more opinions on what these numbers are like for a property like this and if anyone here has had any experience with a similar property.

Thanks for all your help BP!

@Account Closed I hear you on that one. Are you running into some bad data as well? And if you are does it create more work and a headache for you?

Hey BP,

This is kind of an off topic question but I just wanted to get some input from some experienced Real Estate "searchers" such as yourselves.

Here is what I am finding with my real estate searches: 

BAD/WRONG/INCOMPLETE LISTING INFO!

I find this problem especially on local brokerage websites or the other websites that professional real estate agents list their properties on. I just find this kind of strange because essentially the listing information is the real estate agent's and brokerage's product, and they seem to have some interesting representations of their product.

Just wanted to see what you guys thought about this.

Thanks!

@Brad Vancil Hey Brad, I am a new investor from Johnston. I have been a member here on BP for about 4 or 5 months now and have seen a few fellow Iowans, some of which I have actually met up with here in central Iowa. I have yet to attend any local REIAs but have really been itching attend one (I actually started the Real Estate Investing & Networking Club at Iowa State University where I am currently a student). I have also been trying hard to get my first deal under my belt lately. I work in Des Moines and have kind of developed a liking for the Highland Park area along 2nd Ave because I drive through it every day. Last week I looked at a property there that really had some great potential possibly, it was just way to much work for a new investor like me. This week myself and a business partner are checking out another property on 2nd Ave (we really want to get our first deal).

The most difficult part about investing for me is financing. I just turned 20 years old and as a college student at ISU any sort of money is hard to come by.

I have made a lot of great connections with agents, brokers and other investors in both Ames and Des Moines of which I will continue to grow.

If you would like to meet up sometime and discuss real estate I would be more than willing to chat. I will send you a colleague request with my email and phone number.

Happy investing and I look forward to learning with you.

Hey BP, I am a new investor who just turned 20 years old and after months and months of educating myself on anything and everything REI I have been really itching to actually put it to the test.

I have located an area that I feel is the best starting point for me as a new investor in my area. I have been really digging deep into the area's statistics and I drive through it every day on my way to work.

Last week my business partner and I found what we thought was a great rehab project in the area and in our price range and we went and checked it out with a local agent...well unfortunately, we decided it was too much work for our first deal, so we kept looking.

This week I've had my eye on a property but I would really appreciate some experienced guidance first.

The property is listed for $51K with 2 beds and 1 bath at nearly 700 sq ft and valued at  $61K. It was built in 1941 and based on the pictures it seems to be in decent shape. Parts of the exterior need some paint as well as the interior, the yard needs some work, the kitchen needs new floors and new cabinet doors, etc. ( I have yet to visit the property in person but this is what I could gather from the pictures). Most, if not all, of the rehab work would be done by myself, by business partner, and my father.

As for the comps in the area the neighboring properties are valued at $67K and $70K, there are about 4 properties within a few blocks of this property for sale with the same specs that are all listed for $70K, there is a property 2 blocks away from the property that was just sold at $88K with the same specs, another property that has similar specs that is near this property that was sold for $86K and another property that was sold just 2 weeks ago that is 1 block away with similar specs for $75K.

With this information I put together what I thought would be a very reasonable ARV for the area on this property at $69,900 based on a very rough estimate of repair values at $5K-$10K.

I also just want it to be known that I am really not looking to make a HUGE profit on my first deal, I want to get some experience under my belt first but I don't want to lose money either. I know some of you shoot for $100K profit or so on your deals, but to start, my goal on my first deal is to profit at least $10K. With that, I have some questions on how to go about pursing this property, or my first property in general.

1. Being just turned 20 years old what would be the best way to finance a deal? (I have a grandfather who is into real estate investing who may be able to finance a few of my first deals, but I want to make sure I look at other options first.)

2. Is it probable that with that conservative ARV number I would be able to profit at all?

If you need any more info on the deal I have plenty of it, I just didn't want to make my post too long. Also, more details are to come on this as I plan to go visit the property this week.

I appreciate all your help BP Community!