All Forum Posts by: Scott Mac

Hi Mark,

My first thought would be the future risk of building a new structure for this type of business. Do banks finance these types of businesses for construction loans? What if the Federal Government starts cracking down on these types of businesses? I think they are still illegal under Federal Law? If they are forced out of business what then?

According to smallbiztrends a bit more than 50% of business startups fail in the first four years. Do you want to risk construction costs for that?

Regarding the rent.  It seems like you may have a "Brownfield". Has it been remediated? Can you attract a higher paying tenant, given the EPA problems it has had?

Regarding the construction.  An Environmental Phase-1 will probably pull up the dumping and etc pollution problems, and might require a Phase-2. Will the construction lender require a Phase-1? Will the lender lend on a Brownfield? 

Just my initial thoughts on this.

Good Luck!

Hi Robert,

I have seen those small dents before. I have no idea how they happen, but if you provide the fridge free of charge and it's a class-A replace it. Class B, if the new tenant complains replace it, maybe. Class-C point it out and say that's the fridge and leave it at that. 

If you charge for the fridge, give the new tenant a choice in price between this one and a new one and make the price of the new one seem less attractive than the old one, so they see it as a bargain.

What does a scratch and dent low end fridge sell for compared to a new one, $50 to $75 less? Seems hard to justify charging for it when there is no "Repair Bill" to back up the charge amount, but that's up to you.

Good Luck!

Typically over 4 units are based on CAP Rate and Income-Expenses vs. comps.

Hi John,

Hash it out with the help of a local real estate attorney who forms LLC's.

He may suggest an LLC, where the operating agreement will lay out the details for everyone.

If everyone is not equal in duties and rights for the entity, you may have a Security situation on your hands, which is something to also discuss with the attorney. You "Do Not" want to run afoul of any Securities laws, either State or Federal. 

I am also under the impression the a TIC (tenants in common) situation could also be a Security in some instances.

After talking to an attorney, talk to a Real Estate Investment CPA about what the attorney recommended, and talk about personal tax implications, book keeping costs and tax return costs, etc...

Partners can be common lingo for owners of LLC Membership Units with a lot of people.

Good Luck!

Hi Julie, 

I'd just call and ask the questions. Then you can get more of a "Feel" for them.

Just get it done, one way or the other. If you are uncomfortable with the results of the call, try another.

And I doubt that you're a pushover. You wouldn't have gotten this far if you were.

Good Luck...

If they make a quick call to the Police Department it might solve that problem (in some areas).

Hi Daniel,

A grander entrance area, flower boxes and better front path would probably be your best bang for the buck, and lower the risk by avoiding construction over runs.

Some of my ideas to curb appeal the house (if they make economic sense):

1. Widen the front walk. Set a couple of rows of bricks that match the front step bricks alongside the entry walk on each side. Just set the bricks in a sand base, making the entry sidewalk as wide as the front porch.

2. Remove the screen door (but leave it in the basement for the future owner).

3. Paint the horizontal portion of the rain gutters and the fascia a trendy green.

4. Paint the vertical trim at the edges of the house, as well as the shutters the same trendy green.

5. Paint the front door glossy black.

6. Remove the house numbers from the mailbox and replace them with large trendy looking numbers at an angle above the mailbox.

7. Replace the single front porch light with a light on each side of the door, using lights that have some curb appeal “personality”.

8. Clean the roof stains or replace it, and repaint the foundation.

9. Infill the shrubbery and cut it all to the same size and height.

10. Spray the utility meter to match the background (if they will let you).

Good Luck.

Hi Konrad,

If it were me doing this, I’d ask my friend to telephone every “Decision Maker” on the properties sale, and tell them I (his friend) am interested in buying the properties and would like to meet with them in person.

When they say yes, have him hand you the phone and introduce yourself to them, and then set up a time to meet with them, one at a time (not as a group) in their homes. Try to meet them as quickly as possible.

When you go to meet them, focus on trying to get them to know a little about you, and to like you.

Then explain to them you will need to go visit the properties and see what shape they are in and in what part of town they are in. Don’t be this blunt about it, but very badly run down structures in a very bad part of town might not be what you want to start out with, but that’s up to you.

Go visit the properties as soon as you can, and have a written offer ready to present to them as soon as you review the last structure.

You will also need to know the Fair Market Value of each, and far as Owner Will Carry, talk to them about how dealing with you on an OWC will save them Realtor fees, and allow for a quicker close. And I’ll leave those last two items to further discussion from others.

Good Luck!