All Forum Posts by: Otto Kinn

@Matthew Rogers I see you had mentioned the 12th or 13th in your other post. Would the 12th in Minot work for you guys?

@Brent Schaff What sounds like a good place to meet?

@Derek Dame I figured I would ping you as well.

@Matthew Rogers

Minot is a strange environment, no doubt. The established investors seem to stay rather quite. Fortunately for all of us, BP has really supported a new wave of investors for ND's big four (Minot, Fargo, Bismark, & Grand Forks). The other thing with Minot is that it was completely overbuilt a few years back due to the oil boom, but now that the population is back on the rise for reasons other than oil, vacancies are being filled. Currently you can buy existing property for cheaper than you can build it, but my estimate is that will change in the next 3 to 5 years.

Also... DO NOT UNDERESTIMATE RURAL ND. I bought a 6,000 square foot building on main street in a small town for $120,000 with a 1.9% interest rate, and in the next 3 years it will net $3,000/mo up from $1,000/mo today. Find a SFH that can do that. ;)

Investment Info:

Single-family residence fix & flip investment.

Purchase price: $60,000
Cash invested: $5,000

We found a property investor from NV in a Craigslist ad. Turns out he had a property perfect for a fix and flip. We got a look inside and decided that it had enough potential to buy. We talked to some local realtors to see what it's market price was in good condition, and felt as though the profit margin was worth pursuing. Doing most of the work ourselves. Will update upon sale.

What made you interested in investing in this type of deal?

I was looking for cheap value-add opportunities to build some capital for more upcoming commercial purchases.

How did you find this deal and how did you negotiate it?

I found a phone number seeking ND investors via a Craigslist ad. After calling the ad I soon found out that it belonged to one of the top ranked property holders in Minot, ND. He was an investor from NV and had been in the game for 40 years, now he is liquidating his national portfolio to keep it local with his Vegas investments. He had 20 properties to pick from, but I was drawn to this house, as it had the most value-add potential. I negotiated it down to 60 from 80 by offering a cash deal.

How did you finance this deal?

We put some equipment up as collateral and got a $60k check from the bank for the purchase.

How did you add value to the deal?

We added an egress window to the downstairs room, and added a half bath downstairs as well. We are also gutting and rebuilding the kitchen to open up the space, as it was very cramped before. Updating floors, paint, exterior repairs, adding a fence, and some minor landscaping.

What was the outcome?

Still working on it, will update this spring!

Lessons learned? Challenges?

We found a roof leak that lead to a lot of added work, as well as a few more structural items that needed to be addressed. Fortunately it didn't ruin our profit margin, but we did learn more of what to look for when analyzing a property. The best part is, I developed a relationship with a successful real estate investor who since offered to help finance some of his other properties as he is looking to retire, and I can leverage his knowledge and experience to build my future.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

We found an amazing Agent that had sold a house identical to ours in the same neighborhood. She has been amazing in terms of recommending what buyers are looking for, so that we can flip our house to suit the market. We also had a GREAT experience with the title company. In ND, they handle every legal aspect of purchasing single family properties.

Thanks Andrew! I'm hoping to do it again. The incentive programs from some of these small towns are just so phenomenal!

Investment Info:

Retail commercial investment investment in Garrison.

Purchase price: $120,000
Cash invested: $30,000

When purchased the property only had one operating business. I improved the spaces and added two additional commercial tenants.

What made you interested in investing in this type of deal?

I saw the unused potential that this building had.

How did you find this deal and how did you negotiate it?

Existing relationship with the local realtor.

How did you finance this deal?

Local area improvement association provided a buy down option for a 20 year rate of 1.25% through the local bank.

How did you add value to the deal?

I refinanced the property for an additional $30k to build onto the fitness center, shop, and retail space.

What was the outcome?

The value of the property rose significantly because of the rental income. The cash flow rose from breaking even to profitable. Even the local area improvement association voted me in as a new board member, because they were excited to see this sort of ambition from a 24 year old. My short time on the board has taught me the unbelievable benefit that local economic improvement can provide for my own business as well as others.

Lessons learned? Challenges?

Because it was my first investment property, I've learned just how expensive renovations can become. I was surprised at how much money you can save to do most of the general construction yourself such as framing walls and hanging drywall, leaving the important things such as electricity and plumbing to the professionals.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

I worked with a lawyer to insure asset protection, a real estate agent to assist with the purchase, an insurance agent to find a great rate, and my CPA to create a tax strategy for the end of the year. This team of wonderful professionals assisted me to approach this deal in a far more productive as well as confident manor, than if I were to have done it alone.

Let me first entice you with my story. (If you don't care, just read THE PACED LOAN PROGRAM and HERE ARE THE NUMBERS)

WHAT MAKES ME SPECIAL

Nothing!! I have no college degree, and when I was first living on my own, I saw that spending more than I made was normal. That was until some bad decisions in cryptocurrency lead me to a Dave Ramsey YouTube video that pulled me into a rabbit hole of podcasts, webinars, and BOOKS upon BOOKS that have all shaped me into living on less than I make, and investing in my future.

I've been fortunate to raise my monthly income working for the local telecom company by certifying as a Cisco Certified Network Associate, soon to be a CCNP. Over the span of 3 years at this great job, I'd managed to save $30k which I was fully intending on paying down my house with. That was until I saw my opportunity.

THE UGLIEST SIGN ON MAIN STREET

I was helping the local realtor with some computer problems that he was facing, when I saw a pamphlet on his desk advertising the fitness center on main street with an ugly faded sign on the front. I asked him what he knew about the seller and if it made any money. In short, the seller was too busy to run the gym and just wanted out. The gym itself paid for the utilities, insurance, taxes, and mortgage, but didn't really make any extra money to take home. I asked him why it hasn't been sold already, and his answer was simple. Nobody could make the numbers work. Intrigued, and asked that he could show me around, and so he did.

THE NUMBERS WORKED!!

What I saw was a 6,000 square foot building with a gym that occupied only HALF of that space, but let me remind you of the kicker... THE GYM ALONE PAID FOR THE EXPENSES!! There was an 800 square foot shop space that could be leased, and an 1,800 square foot (treadmill graveyard) that could be converted into a retail space. I was thrilled by what I saw, so I thanked my realtor friend arduously and ran home to crunch the numbers again, and again, and AGAIN. After I was CERTAIN this would work, I contacted the local realtor again to discuss my options, and what he told me changed this good deal into AN AMAZING OPPORTUNITY!!

THE PACED LOAN PROGRAM

He was a member of the local area improvement association, and as such informed me that they will buy down the interest on my loan so long as I bring a new business to town, and because I was going to file an LLC to rebrand the gym entity, I would qualify for their Paced Loan Program. This meant that I am only responsible for paying 1.15% interest on my mortgage payments. Many paced loan programs are different, and you need to do your research to make sure you are not being bullied into another party's special interests. Small town area improvement associations however, are generally interested in incentivizing new business owners, to bring their products, services, and jobs to their local town in order to stimulate and grow the local economy. Fortunately for me, the latter is the position that I had found myself in.

HERE ARE THE NUMBERS

I bought the building AND the fitness equipment for $150,000 ($120,000 for the building and $30,000 for the gym equipment)
I used my $30,000 out of pocket capital for the down payment (plus closing costs etc.)
I spent just under $200 filing an LLC with the state for the fitness center.
I refinanced the property after closing for an additional $30,000 in cash to renovate the other rental spaces.

The gym continues to pay for expenses even amidst COVID.
The shop space is leased for a 3 year term at $700/mo
The retail space will be offered for a fair market value of $1,000/mo

With soon to be 3 businesses operating inside of my building, I will have not only increased the value of the property, but I will have also brought two new businesses to my local town, creating a valuable return for the local area improvement association. Everybody is happy :)

My long term plan will be to sell the gym entity and lease that space to the purchaser for $1,850/mo.

THE BP COMMUNITY

I've expanded my search to other thriving rural communities and have found other Main Street properties with massive potential when combining Paced Loans, with Opportunity Zones, and Main Street Improvement Programs. From an outside view, often the numbers don't work, but when you get creative and bring new opportunity to these small town streets, I think you'll find that it can find it very rewarding for everybody involved.

What sort of creative deals have you put together to turn a boring property into a winner?

Have you found that investing in the community can be rewarding to your pockets?

I'd love to answer any questions or hear about how you may have seen the benefit of their local incentive programs!!

@Ronald Rohde The gym has no employees. It's an unmanned keycard access facility.

I have also received answers to my OP. There is a business model referred to as a HUB which too is unmanned so long as the packages don't need to be signed. This is the model I have chosen to monetize package pickup.

I have no further questions, but if somebody else is curious about the subject, I would love to provide more information.

@Brian Van Pelt

I appreciate the feedback! The USPS is ironically the one driving a market for 24/7 package pickup, as their operating hours are too inconvenient for the average person.

The coin op laundry is a good thought, but already present in the area.

Hello everybody,

I'm new to the BiggerPockets community, so I look forward to meeting you all and having some wonderful, engaging conversations.

Let's get right into it. I've recently taken over the fitness center in my town (purchased the building & business). The building itself is 6,000 sqft and the fitness center only occupies 1/3rd of the building. The fitness center alone is enough to cashflow the rest of the property, but I purchased the building in order to put the other wasted potential to good use. I have plans for the 2nd portion of the building, but this leads me to our discussion as to what I'm going to do with the 3rd part of the building, the garage.

I live in a lake town, so there is a really large demand for 24/7 package pickup in this community. Between the visiting campers and the cabin owners who usually aren't home for days at a time, and this portion of the building would be the perfect vessel. The garage doesn't have access to any other part of the building, it's on Main Street, and it already has surveillance installed. 

I've found lockers that you could install for automated package pickup which have billing systems incorporated to monetize the process either in monthly utilization fees or per package pickup fees. The problem is that I haven't found any other resources on people who have monetized this, as it's mostly offered as a free service for multi-family dwelling units. The locker retailers though have mentioned examples of other people monetizing these lockers for the same purpose.

The other catch is that I would need to have somebody onsite to sign for the packages and put them in the respectable lockers, but if I have to employ somebody to do that, it's no longer a profitable venture. My other idea was to bring a business into that portion of the building, such as an internet cafe, and work with the tenant to help facilitate the package pickup. That, however, would come with some hurdles as well.

Has anybody monetized package pickup in this manner? Is it to make this headless without the need for an employee? Is it profitable even in a good market? Are there other things that I could/should do with this garage to make money? What other ideas do you all have?

Other notes:

• I have floor plans of the property if that would be helpful for any of you to visualize.
• If the package delivery brings an additional 2~5% tax income for the city, they will potentially pay for the lockers as part of the main street initiative.
• Locker examples:
  • https://www.luxerone.com/
  • https://www.parcelpending.com/
  • https://www.packageconcierge.c...

I look forward to hearing some feedback on this! :)