All Forum Posts by: Troy Stange

Really? Even on an assignment? I thought that I was limiting myself to that, that I was mitigating risk.

I don't have an LOI in front of the guy let alone a contract, so I only have the skimpiest of information from him so far. I have current rent roll, a survey map and an income statement that spans Janâ€"Aug '08.

How much digging do you do before getting all the rests of the info? I was under the assumption that you renegotiate your price when you find more information during the due diligence period.

How much do you request out of a seller before submitting an LOI? How much time do you spend in due diligence before presenting an offer? I mean, I expect to do the effort, I just thought you threw down a temporary offer and expected the to change PSA depending on what you found.

Which puts the price, at 10% cap, at about 1.49M–1.5M correct?

I don't have the numbers or the will to dig them up right now.

No, I was mistaken. $34K was Jan through Aug of 08. The yearly total was closer to $52K.

Oh, sorry...I'm not being complete. The other expenses you outline were also included in their profit and loss and, therefore in the NOI. I was just highlighting the fact that the insurance, property management, and taxes were accounted for (along with the utilities, maintenance, etc.) since those were the ones you brought up.

The expenses for this type of facility are like a storage unit more than an apartment. They currently pay 1 guy to manage the place day to day for under $1K/month as a 1099.

Thanks for your input, I appreciate the help.

Yes, I see your point. Thanks Mike, I appreciate the help.

Hi Mike and thanks for the response.

Sure, with the amount of experience you have, it's easy to have that kind of confidence. I'm working on my first deal and I'm sweating over sending a non-binding LOI.

I'm looking at a piece of paper that says I want to buy a building for $1.5M, and that's a little intimidating to me (despite it's non-binding conditions).

Do people use LOIs as their initial bid to buy a property, or do you work out price and terms verbally then make a LOI?

What is the typical turnaround time for approval or response to a letter of intent for a commercial property?

Since it's not enforceable, should I have a lawyer look at it?

Thanks for your response!

I've got an NOI of $13,101 with (stated) expenses about 35K/year. (Insurance is under $4K.) I suppose I left out that key bit.

Property management is currently being done by a band member who's renting a space and that $ is accounted for in expenses.

Taxes are $8500 and are also included in NOI.

At a 10% cap, that's 1.57M, correct?
Also, can't I add a contingency about finding financing since I'd have to find the downpayment?

Hi
I found a building that was converted from a senior living facility into a band-practice facility. The rooms have been soundproofed and are rented to bands to practice and store their gear. It's in a city known to be a breeding ground for new bands. There are roughly 90 units and it has been 100% occupied for the past 3 years. It sits on roughly 7 acres in a mixed residential neighborhood. Evidently, its in a 100 year flood plain and raises some issues with developing the rest of the land.

Asking is 1.7MM with $150K down, seller-financed. And he's already said he's negotiable on the downpayment. It grosses ~$17K/month and cash flows approx $5K after debt service.

My plan is to see if I can get it for 1.4-1.5M and assign it. If I could find the $150K, I'd buy it and keep it for cash flow, but I haven't had much luck and I don't want to get hard money since its my first deal and I'm not ready to tread those waters.

Questions–
1. Given this info, does it sound like a good deal?
2. Since its seller financed, I can't really put a contingency about finding financing, can I? I want to get it under contract and then find a buyer to flip it to and I think I'll need some time to do it and a way to back out if I can't locate one.
3. What am I missing?

Thanks in advance!