All Forum Posts by: Mav Larson

I've noticed the same thing. I've targeted several tax deed sale properties in the past only to have them disappear off of the sale list the day before. I have wondered if these homeowners are approached before the auction by investors offering to purchase their properties. Does anyone know if this happens? Are there other things that investors offer or other ways that investors get to these homeowners before their houses go to auction? 

Lol, I don’t know about that! All I can tell you is from my own experience. I don’t own a building on a Rails to Trails, but I used to cycle a lot on the local Rails to Trails. It leaves from near the center of town, wanders through some of the older industrial sections, then through some lower middle class neighborhoods, and then out into a state park.

Before I had a kid, I would ride it out and back at least twice a week. Most of the people I saw riding on the trail were either recreational riders just out getting exercise or hard-core cyclists out training. I never saw anyone acting suspicious on the trail.

I had always thought that the visibility that the trail offered was a positive. Business could get extra exposure with signage fronting the trails, etc. In fact, we just had a brewery open just off of the trail last year which allows cyclists to meet up there after rides. Maybe the opening of the Rails to Trails would even increase the value of the property.

Maybe I’m being biased because I was a cyclist though. I also have to admit that I only rode the trail during the day so I’m not sure what kind of exposure you’d have at night.

Anyway, hope this helps! 

Hey Teri, 

If you have the tenant pay for taxes and your insurance, they don't pay it directly to the county and the insurance company. You should be giving them an estimate at the beginning of the year of what your costs for those will be, and they just reimburse you. At the end of the year, you just do a reconciliation of the actual costs. That way you still have control and limit your risk. Hope that helps and good luck.

Ok, I’m back in town. Thanks for all of your input. 

@Joel Owens @Tim Rutledge Thanks for your advice about NOI not influencing the sale price at all. That's what I suspected, but when the developer asked, I was having second thoughts. Also, I don't need my office there. It could be anywhere - I just use it as office/storage/inventory for my business. I have no street sign so I would just relocate if I sold.

And thanks for the tip about being taken advantage of. I'll definitely take it slow and seek advice as the process plays out. 

@Dave Fontana That's what a lot of other people have been telling me. If it's worth X today, it's going to be worth X + X in 5 -10 years. If some developers have already asked me to sell, how many more will ask in the future. I'm just not sure. 

@Tyron McDaniel @Mark Robinson It never occurred to me to JV with a developer by contributing the land as equity. Thanks for that idea and I'll definitely consider it as I move forward.

This was never going to be a "forever" buy and hold. The two strip malls are from the 60s, I'm only spending a minimal amount to get them turned around and attractive, and they do cash flow every month. If I sell now, I wonder how much I'd be leaving on the table as opposed to selling them in 5 to 10 years. On the other hand, if I did sell now, I'm sure I could find deals and undervalued properties to purchase from the proceeds. 

Hey guys, I’d like to ask your opinion on a potential deal. I’m going back and forth on this one and would like some opinions from people who have some more experience than I do.

Some background: 

I am a small business owner that needed an office, so in 2012 I started searching for properties that would be less expensive now but more desirable at a future date. In 2012, I found and purchased a one acre property with a 2 unit, 3,500 square foot building on it, between a major university and the city’s downtown. I knew that the university was pouring money into the area around their end, and the city was pouring money into the downtown area on the other end. I had a good idea that eventually they would meet in the middle which is where my 1 acre property is located.

There is a dilapidated 1 acre, 5 unit, 6,000 square foot building next door. In 2014 I asked the owner if he’d sell it to me and he did. I now own 2 acres, 7 units, and a vacant lot between the university and downtown. In 2012 I had a good idea that redevelopment would eventually reach my properties. Now I know it will.

I’ve already started rehabbing the strip malls, I reached out and got a couple awesome tenants to take a chance and move in, but I still have a ways to go to get these properties the way I’d like them.

Several weeks ago, a developer asked me if I'd be interested in selling the properties. He asked for my rents and NOI. My current NOI is $60,636/year. I know that within three years, with the renovations and reaching out that I'm doing, I know that I could get NOI up to $79,200.

Property Fact: Zoning on the 2 acres allows for about 100 residential and 50,000 of commercial space.

So if I were to set a price and sell this, does anyone have any insight into pricing this based upon them approaching me, current NOI, NOI in three years, and knowing it's highest and best use?

FYI: my original exit plan for the property was to sell it to a developer, but not now, in about 10+ years. I'm not in a hurry to sell. If I did sell the property, I would eventually reinvest in real estate.

Any comments would be greatly appreciated. Thanks!

I know it's too late at this point, but in my residential leases, I add a clause that charges an hourly rate for repairs if the landlord makes the repairs himself (me). I think it's an idea I got here on Bigger Pockets, and it may be something you want to add to your leases in the future. 

The county I live in sells a handful of tax deeds at auction on a monthly basis. I’m going tomorrow just to check it out and ask try to ask some questions. The clerk of the court showed me today how to find the tax records for each property to see if there are any liens recorded.

If there aren't any liens recorded on the property in the county property records, is it guaranteed to not have any liens against it? If the property records look clean, is buying a title policy worth it? And if buying at auction when there’s no certainty of having the winning bid, when would I actually purchase the title policy?

I was interested in one vacant, residential lot that is near a commercial property that I own, but when driving by it, I realized that the building from the adjacent property covers half of the vacant lot that’s up for auction tomorrow. How does something like that work? Anyway, if someone buys the property tomorrow, I’m going to ask them how they plan on dealing with it. 

I'm in a very similar situation. I purchased a 5 unit strip mall in a questionable part of town for $299,000. 4 units are occupied, 1 unit is empty. The 4 units are occupied by a barber shop, church, tax preparation office, and a private office. I normally wouldn't be interested in a property like this but it's in the path of development, the neighborhood is on the upswing, all of the tenants are currently paying below market rent, and I've secured an awesome tenant to open in the vacant unit. I try to look at cash flow above anything. 

As for having a church as a tenant, I think it all depends on what your goals are for the property. Churches don't drive much traffic, so if most of the units are offices or some other type of business that doesn't rely on foot traffic then it's fine.  But if you want to create a business climate that thrives more on visits to the stores, then I'd advise against a church as a tenant. 

I am the landlord on a NNN lease to a national tenant. In the Fall of every year, I send the tenant an estimate of my costs for the property: property taxes, insurance, garbage, CAM, and periodic repairs. I add that amount to the tenant's lease payment. In the Spring of every year, I give the tenant a reconciliation of my prior year's expenses. If they overpaid on my expenses, I send them a check. If they underpaid my expenses, they send me a check.

I pay the bills when they come due but I pass along those costs to the tenant in the form of 12 monthly lease payments.