All Forum Posts by: Nick L.

@Courtney Jones I can't see the part of the text you quoted but in general that's true. Sites like auction.com and Homesearch require a cash close within 30 days of winning the bid.

Now are there ways around this? Yes. You could line up hard money or have a flexible commercial lender on hand.  They will have to move fast and be ok with not conducting an appraisal or getting a warranty deed. But all that has to be arranged in advance, before you bid. 

For sure you're not going to be able to get conventional FHA-type consumer financing for an auction property.

Thank you all for your thoughts. 

I ended up picking up a very similar building on 78th & Center, in Milw right on the edge of Tosa. 6 units, all 2BR 1BA with garages. Building in generally solid condition. Should rent around $700/unit.

I got it for $253k which is about the price of 4 unit buildings in that area, so I feel like I got 2 units for free. 

At a minimum it can continue with C+ tenants and make good cash flow. But I feel like it will pull in people who want to be near the Tosa strip on 70th & North so I'm hoping to push to B tenants in the next couple of years and really raise the rents and value.

@Jean Norton I share your pain! Another approach would have been to show up every week and bid on a few good properties up to your max. Even cowboy dude can only keep overpaying to a certain point.

I actually have nearly the same success in the winter as the summer. Fewer people looking, to be sure, but the ones out there are much more serious. 

Thanks @Karen Margrave, you make some great points. This deal is so tempting on the surface that it's worth doing some digging. 

I've had this problem before when the appraiser is more used to residential properties. Have your lender work with the appraisal company to send someone used to commercial appraisals. This means:

- Income based approach over comps

- Not worrying about bad tenants or cosmetics

FWIW I just had an appraisal done on a 4 unit multi where two of the tenants refused access. One of them is a known hoarder in the middle of eviction. The appraisal still came through with no problems.

@Karen Margrave @Dave Van Horn @Chris Stone @Bradley Bogdan

Looking to tap into your expertise here. 

A local broker is offering an 87-bed halfway house/transitional living facility at a clear 12 cap NNN from a national tenant. Lease has 9 years left on the primary term and two options totaling 15 years. 3% rent increase every year. I could pay off the note in the primary term and sit on huge cash flow after that.

Per the broker, the licensing and zoning are so hard to get that the tenant is more or less locked in place. The demand for this type of facility is unlikely to decrease. Asking price is in line with city assessment. 

However, the underlying building and land have very low value without this one specialized use. Also there's a clause in the lease that the tenant can leave if they lose certain state contracts. The broker says the location and zoning are such that it would be easy to find a replacement tenant in the same business. I don't know how to independently verify that claim.

I would appreciate any insights you could offer.

Looking at this another way, I could buy it on a 10 year fixed am/term, pay the note off in the primary lease period with mildly positive cash flow, then be sitting on massive cash flow with no mortgage for the 15 year option terms and beyond if the tenant re-leases.

Hoping someone here has experience in this area... it's way out of my circle of expertise.

A local broker is offering a halfway house/transitional living facility at a clear 12 cap NNN from a strong regional tenant. Lease has 9 years left on the primary term and two options totaling 15 years. 3% rent increase every year.

Per the broker, the licensing and zoning are so hard to get that the tenant is more or less locked in place. The demand for this type of facility is unlikely to decrease. Asking price is in line with city assessment and I'm pretty sure they'd take a lowball.

However, the underlying building and land have very low value without this one specialized use. I don't know how to evaluate the prospects of this type of business. And you never know when the regulatory environment might change so halfway houses crop up everywhere.

Any thoughts?

I use First Am in Brookfield. After I did a couple of transactions with them, they gave me free access to their MyFirstAm site and app. They also do free search and hold letters for sheriff sale properties.