All Forum Posts by: Ryan Aurand

Got it, thanks for your input @Bennet Sebastian. Is this the first time you've heard of this strategy? Or is it fairly common?

Hey BP!

How common is it to renegotiate warehouse leases during due diligence? And how common is it to put a property under contract while only intending to close IF someone is able to renegotiate and extend leases? Not saying I would try to be discrete about this as a buyer... more so wondering if sellers ever have an appetite to allow potential buyers the chance to extend leases before closing.

Some background here- I'm a new industrial investor who is in fairly deep talks to acquire a small warehouse. It has two tenants occupying 6,000 sq ft total. They have 2 years remaining on their current leases, and this deal would be much more desirable to me if I was able to extend those leases each by a few years. 

What are your thoughts? What other details, if any, have I failed to consider?

Thank you!

Hey BP!

I've got an exciting opportunity to acquire a small warehouse (6,000 sq ft) at a favorable price. It is currently home to two tenants on NNN leases for the next several years, and the property recently underwent a major rehab. Being a new investor to the industrial space, I'm having a TOUGH time determining what the rental demand would be like if I ever need to find a new tenant, perhaps after the existing leases expire.

The warehouse is located in a rural North Georgia town, home to about 4,000 people and growing very slightly.

How would you all go about determining the supply & demand for warehouse space in this region? Thanks in advance!

@Sam Mitchell one side 3/1 and other side 2/1. Built in the 1930's. No substation CapEx requirements needed at the moment.

@Matthew Nicklin Great point. This issue has been settled already with my lender as one of the tenants will be leaving before I close :) this almost killed the deal before...

@Nick Fitzpatrick

Ya there are a couple there.

Hey ATL BP Community!

I have a deal about to be put under contract and I'm wondering if y'all think it's worth following through on. I'm particularly curious to hear everybody's thoughts because it's not in the immediate EAV neighborhood, but rather a half mile north of downtown EAV (in between Edgewood, Kirkwood and EAV). 

It's a Duplex currently renting for $2,400 but likely to reach $2,600-$2,800 in the coming years when one of the long-term leases is up and I can rent it out closer to the market rate. I am an FHA buyer and it looks like I'll get it under contract for ~$360k.

I have a sense for what the near-term inflows and outflows will look like, but I'm wondering how this group feels about this area for long-term (5-10 yrs) appreciation? Any input is greatly appreciated :)

@Anthony Dadlani

Good question. In reality, it could be either. I’m currently in the middle of a fix and flip and could see it working out well.

Thanks for the replies. I think I'm catching the drift that my energy would be better spent borrowing private money and looking for distressed properties. However, I still don't think that what I'm referring to is seller financing. This is a temporary profit sharing deal in exchange for a decreased sale price. For example, if a seller is willing to offer me 20% below market value (in exchange for temporarily sharing a portion of the rental income that a property produces), and a local bank is willing to lend to me at 80% LTV, then I would be effectively be acquiring the property for free. Then, after 5 years of profit sharing, all the cash flow would be mine and I would just be left making monthly mortgage payments to a bank.

Traditional seller financing would typically (but not always) require a downpayment and then monthly payments to the seller for 15, 20, or 30 years... not 5.

Does the difference between the two options make sense? And does it change any of your minds?

 

Hey BP!

I'm grinding hard to get a SFH or duplex under contract in the greater Atlanta area. Part of my real estate goals include maximizing cash flow in 5 years from now. Put another way, I am less concerned with cash flow in the super near term but rather looking to make investments into solid rentals that will produce sufficient cash in 5 years. I don't have a ton of funds at my disposal so I'm trying to get creative about financing. The idea I'm still workshopping goes as follows: Negotiate with sellers (particularly investor-oriented sellers) to accept a lower price for their property in exchange for receiving a significant portion of cash that the property produces for the 5 years following my purchase. After the 5 years, I effectively own the property free and clear and can reap all subsequent cash flow.

The major hurdles with this plan (that I can think of at least) include:

- Creating complicated legal documents that attempt to lay out how much cash the seller is owed each month

- Finding sellers who are willing to put up with the hassle of this type of transaction, especially for the smaller deals I am looking for

The biggest 'pro' to this idea, however, is that the seller gets residual income for 5 years (which may seem like an eternity to some people) and I, the buyer, accomplish my objectives in acquiring homes w/ less money down and setting myself up for cash flowing properties in Years 6 and beyond. 

What are you guys' thoughts? Is the juice not worth the squeeze? All feedback is appreciated :) 

@Timmi Ryerson That sounds like a very helpful software! Would you mind sharing which software that is?