All Forum Posts by: Ron Edward

Waiting area to the left with 4 walk up teller windows, connected to a break room and storage room, 2 teller drive thru’s on the outside, plus an ATM.  Walking through the front door a large vault/door greats you.  Space to the right is open with 3 desks situated, behind these desks are 4 decent sized rooms with one being a conference room.  The open area could be converted into more enclosed office spaces for a specialty medical center, chiropractor, urgent care, etc.. Large bonus upstairs staircased unfinished area, not part of the 3,700 sq ft.  This could also be finished out for more rooms or left as storage.

Based on comps, I can see getting at least $23 sq ft/yr as a NNN lease.

What’s your assessment for a cash offer?

I would appreciate some advice and input please.

I found a recently defunct, approx 3,700 sq ft, bank bldg in excellent condition with all the office furniture, teller electronics, security system, vaults, lockboxes, parking lot lighting, LCD signs, etc, included.  It’s walk in ready for another financial institution, or could easily be used for a possible medical facility.  

It is approx 12 years old and the quality and location of the building is impeccable.  It has a $1,250,000 tax appraisal with approx $600k of that in land value.  I was told the building construction/parking area alone cost the bank a cool million, not including the land. 

I notice other commercial leases in the area are going from $20 sf/y to $23 sf/y but they are not bank buildings and are not move in ready with everything needed to start operations within mere days, so I’m thinking it might bring even more rent per sq ft.

Based on the information above, what do you experts feel would be a good (for me) "cash" price offer on such a property to use as a NNN long term rental? It is not presently offered for sale, yet, but I have an opportunity to make a "reasonable" offer now.

Thank you in advance for your valuable input.

RE

What a wealth of information everyone has provided...I can't thank you all enough! Very eye opening to read all of these knowledgable insights and perspectives.

I have to say I was kind of stunned to see valuations of under 1 million come in as I was thinking right at, or a little North of 1mill in my assumptions. With the approx gross income being $123,120 and knowing now that the water is paid by the tenant (I inspected the park again yesterday and found individual water meters), I had expenses figured at $19,296 per year (property taxes of $7,396, a "guess" of insurance at $3,500, management fee of $6,000 and a "guess" of mowing of vacant lots/perimeters along with yearly incidentals of $2,400) this would leave a NOI of $103,824, hence my assumption of the park being worth at least 1 million. Jack's figure is $861k so I must clearly be missing something here and/or figuring something too low or incorrectly?

In regard to timing, establishing contact and building a rapport with this elderly lady, all of your advice is well received. I think taking it slowly and giving her a week or two to think, might be a good start and hopefully she will decide to call me back during this time. If this doesn't happen then plan B of trying to put a "face with the voice on the phone" as Adam suggested. I also really like the idea of sending a nice follow-up letter along with a bank letter of credit included (thanks Bruce) and then staying lightly visible thereafter as also as suggested.

Thanks again.

I could use some good advice from the very knowledgable members of this board.  I found a gem of a MH park that I "might" be able to purchase.  It is 15yrs old, on approx 15 acres of flat land, city water/sewer, very clean and well maintained with wide paved streets.  No MH's owned, lot rentals only.  Of the 66 lots, 9 are currently vacant. Rent is $180 per month and I believe this could easily be bumped up to $200 or more with a new owner. Tenants are responsible for their own yard maintenance. This park is in an area where no more are allowed to be built. Taxes are approx $7k per year and the tax appraised value is approx 1mill. These are the main points that I can gather from the present owner and tax records.  There is an onsite manager but I have a person that could manage this park for $500 a month if that manager does not work out.

This park is owned by an elderly widow who is smart but also very skeptical of anyone trying to buy her business on the cheap.  I heard about this park through word of mouth and that she wanted to sell it about a year ago.  I called her yesterday and she said she didn't want to sell now but I could read between the lines that she might, if the price was right.  During our conversation she said that she has had many people call her from out of state wanting to buy it but "no one had any money to buy it with".  She asked me at one point what I would give for it and I responded that I couldn't make an offer because I didn't know what she charged for rent or the expenses involved.  She told me the rent price and said that it's easy to figure out an offer price by knowing the amount of MH's multipllied by the lot rent!   It was a very strained conversation and I could tell I was treading on thin ice, especially if I said the wrong thing, so there was no way I would dare make her an offer over the phone.  I asked if we could sit down one day and discuss this and she said there was 'no use in that!'  Knowing she would be a hard nut to crack, I politely asked her to keep my phone number and call me back if she decided to sell.  I could tell from our converstation how proud she is of her park and rightfully so.  There are also strong emotional ties as her recently deceased husband was the one who built it.  I informed her that I am local, can look after it, have the money to purchase and am looking to buy an investment property soon.

I would absolutely love to buy this park if the numbers are right and I can convince this lady to sell.  I can, at least, provide a 20% downpayment and my banker is willing to give me a 20yr loan, with the first 2 yrs at a fixed rate of 3.75% and the rest of the term adjustable.  I think he would instead give me a fixed 20yr rate of 4.5% - 5% now, if that would be the better option?  I might be jumping the gun talking financing now as I first need to get a commitment from this owner to sell.

Knowing the above scenario, what strategy would you suggest in trying to purchase this park?  Would you risk making an offer and possibly offending the owner in the process (which seems could easily happen) or would you give it time and hope the owner calls you back one day?  Most importantly, what would you value this park at if you made an offer or if she called you back ready to sell?  Thank you.