All Forum Posts by: Reuben Stone

@kahren Aydinyan ,my company is Stone and Browning Property Management ! 

Thank you for all of your feed back. I have some ammo for the negotiation now. Much appreciated! 

@Brandon L. I have many comparable, most importantly the buildings I have recently purchased. @Matthew Paul Their asking price on all their buildings is a good amount above tax assessment. For example, the town has one building assessed at 225,700 and they are asking $350,000. This building is collecting $55380 in rents annually and is paying out close to 50% to expenses. Leaving a net of $27690. This market trades between 9-10% CAP rates. @Russell Brazil , I believe that answers your question. This is just one example. Their asking price of $350,000 put the CAP rate at about 8%. Other buildings they are selling are around 6-7% if you paid their asking price. 

Hey BP community! Excited to announce that I have just closed on my first investment in August. Have been meaning to get back on here for some time. Anyway, I have finally gotten my first investment under control and running the way I want, now I'm eager for the next one. I have met some owners ( three partners) that own a mix of commercial and residential building. They are willing to owner finance, and they have done lots of upgrades such as new rooves, boilers, windows, porches, all the big stuff. Here is the issue, they had the mentality that you buy a building cheap, put a bunch of money into it and see it for a boat load. They don't quiet understand that the income a building produces plays a big part in determining the value. For example, they bought a 6 unit building for 40k put 300k into it, and are expecting to get somehwere aroind 350k. The town only has the building assessed at 225k and One of the buildings I just bought was a 6 unit that appraised at 195k. Granted my purchase was all 1 bedroom, and their building is all two bedroom, in a better location, and better condition. Absolutely this justifies a higher price, but not 155k more! 

My question to you guys is this, what negotiation tactics can I use to make these guys realize that their prices are much to high and  unrealistic? 

P.S. I'm typing this on the BP app and it's being a bit finicky, I'm sorry for typos 

@Robert Davis 

@Blair Knowles 

Currently we do not have any management clients in St. J. I know the market fairly well however and would be open to expanding their for the right client

Robert,check out our website at Stonebrowningpm.com

@Samatha Hiscock @Blair Knowles thank you for the kind words! I am sorry it has taken me a couple days to chime in on the topic! Here are my two cents: 

Vermont is a tough state. We have high taxes, and are a very tenant friendly state. If you can afford Burlington great. But know the majority of the city is fueled by three major universities which means you either be renting to college students or surround by them. Burlington and surrounding towns are trading at between a 7-8% CAP rate. I know a guy who sold for a 5% CAP and made a killing.

Montpelier is a great town, however, it is owned by 3 major families that make up about 90% of the housing stock. Tough people to deal with due to the fact they feel their buildings are worth a million when the town only assess them at 500K. 

Waterbury is prime! Not a whole lot of inventory however. The entire state, Waterbury especially, tires so hard to preserve the "wet lands" that development is very difficult. Not to say it cant be done! 

Barre, is coming back. However, we have a long...long road. But if you do your job well, and rent to the right people its a great town. STAY AWAY FROM THE NORTH END! Every 3-4 years we get a hard rain that lasts for days and it completely floods! 

@Tom S. I finally hounded the lady enough and she gave me the code to the lock box on the building. The code ended up being correct! Makes me feel a little better. I had a purchase and sale agreement emailed to me and basically the way it would work, if i follow through, is I sign the P&S and have 48 hours to provide the funds. Once I do, everything is set and I get the deed in 7-10 business days.

It sounds more legit now, but I still am hesitant because I do not have enough time to have an inspection and environmental test done. 

Has anybody worked with the company property source reality? I found a property they have listed that I have a very strong interest in but I am having a hard time figuring out if they are a legit operation. Basically the lady told me the are the point of contact for the asset management company that run a wholesale operation. the building I am looking at is needs some work but they are trying to sell the building without doing showings. If they cannot sell the building using just the general marketing images and NOT allowing showings then they will open all the doors and allow people to walk through. At this point they will take offers in a bid format. 

What do you guys think? Legit or not? 

Thank you all! 

Joel, 

Thanks for the input! I was thinking the same thing. I dont think it is a very smart risk to take. Just the sheer fact that Aarons makes up more than 50% of this properties income make me uneasy. I think I will have to keep looking ! 

Thanks for the input! 

Thanks for the input! The term of the lease is 5yrs with an option to renew for another five years at the end of the term. I believe they are about 3 yrs into their lease term. Form the questions I have asked the owner they have no plans on going anywhere. The owner is an older gent who is just looking to relocate to Florida and not have to worry about anything up here. As far as it being a (one economy town), Aarons is definitely not holding the town together. If Aarons left there are still plenty of job opportunities and the town would remain strong. The town has been doing ALOT of improvement to its main roads and investors have been buying up large commercial buildings and restoring them to their former glory.\

I am trying to put some kind of owner financing package together with this one but am having a hard time arriving at a fair purchase price. Here are some numbers to go along with it according to the last 3 yrs of tax returns: 

Income-138K

Expenses-83K

NOI- 55K

If the whole building was rented and the apartments rents were brought up to market rents the income levels would be somewhere in the ballpark of 185-190K and then of course we have vacancy in there somewhere, but you can see the potential. But again this is assuming that Aarons doesnt leave.....pretty scary thought!