All Forum Posts by: Scott Lakas

@Scott Lakas *check with planning or building inspections office.

@Joshua Woods If it is “grandfathered” under the current zoning, meaning they changed the zoning after it was built, etc., you are good to go. All you need to do is check the zoning ordinance to see how the municipality regulates non-confirming uses. Most zoning me will say if more than 50% is destroyed in a fire or disaster, you have six months or a year to fix it. If that term expires, you have to conform with the current zoning, meaning you would have to bulldoze or convert it to single family. If it looks like it was probably developed as a duplex and not converted into one, I wouldn’t even bat an eye at it. If it is a house that looks like it was divided, you might want to check with the planning department of the building permit office. But, regardless there is little the city can do in all honesty.

This is on the bank and not yourself. The form is called a FNMA 1007 and is included in the appraisal for residential income property. You can check and see if it is in the appraisal report if they have provided it. If not, they are waiting on the appraisal still. There is nothing for you to do, but if it the appraisal was not ordered correctly, you can call them out on it and tell the loan officer that they are screwing up your deal, but politely of course. You should always have an appraisal clause in your contract to get your earnest money back. If the deal is moving along and in the right direction, your seller will not hold up the deal, they want the money too, and probably just frustrated like you. Because even if you do not close on time and the deal gets killed, they are going to wait even longer to get their cash moving on to a new buyer and starting the process all over, which is probably not a good idea. 

Either your company or yourself have to affiliate with your local Association of Realtors as a dues paying member and you will be able to pay the monthly or annual fee for MLS access.

@Łukasz Juraszek Your scenario is a 3% cap rate. The deal would never work unless there is tremendous upside after purchase. Your lucky to finance something at a 3% rate, so you would likely have negative leverage going into the deal. So, for example, to make a 10% return on the real estate you would have to realize both a 7% increase in income every year along with 7% appreciation in the asset each year over the holding period. The 1% rule is generally a baseline or a smell test. You could get a better deal buying a Treasury note for $1250 monthly income at $500,000 cash.

Investment Info:

Office Space buy & hold investment in Auburn.

Purchase price: $462,282
Cash invested: $140,000

A 4,733 Square Foot Office Building located approximately one mile east of Downtown Auburn. The seller did a sale/lease-back and will remain at the property. During the lease period, the ownership is allowed to market the building to other potential tenants, which will cancel the lease of the tenant when the building is leased. The purchase is a long-term hold of 10+ years due to lack of single-tenant office space located proximate Downtown Auburn.

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

Long-term potential. There is a lack of office space proximate Downtown Auburn and pricing never seems to ever go down.

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

Found this deal on MLS. There was a previous contract that fell through and then it was purchased for less than the previous contract price.

How did you finance this deal?

The sale included a private mortgage that was assumable.

How did you add value to the deal?

The seller wished to stay in the property on a month-to-month basis while we sought a tenant at market rent.

What was the outcome?

Property is being currently leased at market rent.

Lessons learned? Challenges?

NEVER DOUBT YOURSELF OR THE MARKET INDICATIONS.

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

Kathy Overfelt - Realtor (Auburn, AL) & Nick Hayes (Roots Real Estate - Commercial Leasing)

Investment Info:

Office Space buy & hold investment in Auburn.

Purchase price: $462,282
Cash invested: $140,000

A 4,733 Square Foot Office Building located approximately one mile east of Downtown Auburn. The seller did a sale/lease-back and will remain at the property. During the lease period, the ownership is allowed to market the building to other potential tenants, which will cancel the lease of the tenant when the building is leased. Total purchase price was $462,282 with approximately $140,000 in capital raised for the purchase. The purchase is a long-term hold of 10+ years due to lack of single-tenant office space located proximate Downtown Auburn.

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

Long-term potential. There is a lack of office space proximate Downtown Auburn and pricing never seems to ever go down.

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

Found this deal on MLS. There was a previous contract that fell through and then it was purchased for less than the previous contract price.

How did you finance this deal?

The sale included a private mortgage that was assumable.

How did you add value to the deal?

The seller wished to stay in the property on a month-to-month basis while we sought a tenant at market rent.

What was the outcome?

Property is being currently leased at market rent.

Lessons learned? Challenges?

NEVER DOUBT YOURSELF OR THE MARKET INDICATIONS.

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

Kathy Overfelt - Realtor (Auburn, AL) & Nick Hayes (Roots Real Estate - Commercial Leasing)

Hey everyone! I have been appraising commercial real estate for over 15 years now. If you ever have some valuation questions before your next deal, I am happy to help. Please don't ask me to value something, but I am happy to provide any guidance on how or what an appraiser would do for any scenario.