All Forum Posts by: Matt H

Ya I've just been thinking it over and I think I'm just going to try and liquidate. So I think what I'm gonna do right now is contact every dare realtor I can find here in my city and let them know that I'll look at any reasonable offer. That way I can try to seriously get those two big properties.

On that note if you'd be interested in seeing that building and all the details about it, and about the condo conversion potential it's at my website:
mshinvestments

Like I said I need to close this deal asap. So if you wanna do a condo conversion and make 2m net then it might be worth your time to have a look at this property.

Well all good points taken.

Ya I'm on the fence about it. I know that "a bird in the hand is worth two in the bush". It always is. And also "only a fool holds out for the top dollar". It's amazing how much truth is in those sayings.

Well another interesting development is now I have both buildings under contract. So that changes everything again. I think I might just cash out if I can find a buyer. If I can't then I'm gonna do that condo conversion. Those are pretty much my choices, unless that seller would take my building in trade which sometimes happens.

there's hardly any houses in my city that are "falling down". Those don't exist here where land and property is extremely valuable.

Well I guess what tends to happen is that when they act to help you find a property they make their money most of the time, but when they just list it on the MLS which takes no more than 1 hours worth of time and they make five figures profit for that when it sells, that to me is rather easy money. But I guess both sides balance the equation right. But all I'm saying is that flat fee is out there and it's gaining popularity in this competitive market where FSBO companies are poping up everywhere and a great deal of people are using them.

Wow that sounds awsome! Could be very possible too as many condo developers I know are giving a discount for renovations in the form of a credit back to the buyer. But I'm not sure how that all looks on the contract and to a lender. But I don't know all that dot com stuff looks like a marketing ploy.

I can't believe all these interesting things that seem to be coming up....

But this is the biggest of all...

So let me know what you're thoughts are on this...

Something major has come up. I have a deal looming on the horizon. It's for 2 very large buildings totaling 105 units. The seller has agreed to sell me the two verbally and also in a letter. But they can't give me a signed contract because they're in the process of buying this big portfolio of buildings. And only once their done can they sign a contract on the two they've agreed to sell me.

The only way I can finance that deal which will cost $660k is by selling a building I have here in the city. It's been up for sale since January. And so far I've come pretty close to selling but I have not been successful with it yet. I have two offers I'm negotiating with right now but nothing solid yet.

So the other day here's what happened...

The only reason someone would buy this building here in my city or any building in my city is to condo convert it. That's the big thing that's going on here. So to try and make the information on my website more informative and attractive I decided to run all the numbers on the condo conversion and add them to my site to show the prospective buyer what kind of profit they would make after paying my price and then doing the conversion.

Well after doing the numbers I was rather in shock!!! Because what happened was that I conservatively calculated that after the conversion whomever owns the building will stand to make $3.4m gross profit. I had no clue that's how much profit I was actually leaving on the table.

And so if I was to just forget about those two buildings I was planning on buying which had the 105 units, I could instead do the condo conversion myself. And after all expenses and mortgage payout I'd be left with around $2.6m roughly. The only draw back is going that route could take as long as 2 years to finally see all that money in.

So what should I do:

A) Sell out the building for around $1.65m now which would only net me about $900k and use that to buy those two buildings that I don't even have a signed contract on, other than a verbal. But if it did go through I'd have my funds reinvested in a matter of 6 months. I'd have great cash flow coming in and no more deals to have to do or worry about.

or

B) I could just forget those two buildings that I've fallen in love with and just do that condo conversion myself, which will net me about $2.6m. That's if the city approves it, and that's if prices continue to rise at the pace they have been. And that's only after I can sell them all off sometime in the summer of 2008. At which point I'd still have to find something new to purchase to reinvest for cash flow.

To most the condo conversion looks way better obviously, but I guess my only concern is that I'd lose those two nice buildings, and also I'd have to wait as long as two years to finally cash out. It's kind of a catch 22. I am leaning toward the condo conversion simply because I have no signed offer on those two buildings, so in some respect that's mere speculation on whether or not that company will actually follow through on their word and sell them to me. But there's also a risk that I may not get city approval on my building, making it worth a lot less if I then intended to try selling, as buyers only paying the top dollars for buildings which they can convert in my city.

I guess when you do the math the condo conversion makes far more financial sense. But I don't know.

So what would you do if you were me, and why?

ya I like that one. I'll keep that one in mind.

One thing about realestate.....

Here's how investors sometimes get tunnel vision. They go to a property that they're thinking of getting to flip or to rent out. They see it doesn't look good. It needs new carpet, lino, and paint.

But they're mind says to them "you would not want to live here".

So they get cold feet. They get scared and decide not to make an offer or move on it.

But as a "REI" you have to take off those tunnel vision glasses. First you have to realize that "your not going to be living there". And that its okay for it to be run down. Because if you rent it out, well then all it needs is to be "cleaned" which does not cost anything but a bit of your time. You do not have to renovate a suite that you plan to rent out. Because if you do someone who rents it will wreck it anyway. That's the nature of the rental business. So do not renovate. You can rent it as is, once its' cleaned up and patched up.

And if it's a flip, and it's in bad shape, that's perfect because you can use that as a point to negotiate on. Tell them that it needs this and that which is why you're offering x. So the seller will reason it out and maybe think, their right. And sell for a discount. Then you just paint, lino, carpet in a week and its' as good as new. YOu then flip it.

I could be totally off base, but all I'm saying is that I've see way too many new investors look a place and they deep down consciously or unconsciously think "I wouldn't live here". And they don't deal. that's not how REI works. Man, it's sad because I lose a lot of incredible deals when I was just starting because I actually would do that. And I know so many others who have done that same thing. Anyway food for thought.

It's crazy the limitations your mind places on you! One thing I realized just over the course of the last few days is how in any persons life it's odd in that some areas you can feel limitless and have an extremely good understanding of. While other areas you struggle, and place huge limitations on your capcity in those areas due to lack of knowledge, doubting yourself or whatever. So it's really sort of been a wake up for me to look at all the areas of my life and see what areas I've placed huge limitations in and really start to examine those areas and figure out how I can turn them around.

You'd have to work out the numbers and find out what kind of tenants are in there and if they are actually paying their rent. Sounds like it could be a good deal.

So if it is you have to move quickly to get your due diligence done and make an offer immediately. I guarantee you as you're reading this several other investors in your area are you looking at that building and either doing the research and or writing out there offer as we speak.

In my city you can't buy a house for $200k. You can't even buy an average 2 bdr condo for $200k. $200k will buy you a 1/1 condo. So if you can buy an apartment building for that money you're laughing!

Man, I'm paying $820k for a 29 suiter and I thought I had found the best deal on the face of the earth! So $200 for a 16 suiter....sounds pretty good!