All Forum Posts by: Rich Weese

There is a lot of uncertainty in the marketplace currently. I know, because I had a deal fall through recently. No one seems to know exactly what will happen over the next several quarters. There are still many buyers out there including those sitting on a 1031 exchange. the unknown is what is scaring both buyer and seller. If that can be removed, there seems to be a better chance on striking a deal.

The following concept was presented to me and I think it is a pretty good one.

The buyer puts down to 2-3% as nonrefundable earnest money and it is dispersed to buyer within seven days. A price is negotiated between buyer and seller with the understanding transaction must close within 60 days for that price. If the buyer decides not to close within the 60 days, he receives an automatic 30 day extension with price increasing if it is closed during that 30 day period. Additional extensions are given with price increases on each one. The price is fixed, the earnest money is fixed and only the price is left in flux.

I'm doing some calculations but as a seller, this seems like it would protect both sides to accomplishing a successful closing.

Your thoughts?

@Terry Hale

@Bill F.

I wasn't going to reply originally but I think I need to add my two cents. Storage units are not foolproof. I'm speaking from experience as I spelled out a few emails above. When real estate is not moving, neither our people or units in a storage facility. I purchased my building as stated above at 50% occupancy. There were empty commercial strips up and down the street as well as many single-family residences, near new, under $100,000 and not selling. I was "lucky enough" to purchase at the right time and able to increase the occupancy rather quickly to over 90%. People started selling and people started moving and people started needing storage space. It was not foolproof for the people that owned it before me......

I have never found a foolproof investment and I've been doing this for nearly 50 years. My history is on my biography and I'm not attempting to sell anything on bigger pockets.

  If I understand your post correctly, I have two buildings in the Dallas area. One in Grand Prairie and one in Mesquite totaling approximately 300 units. They are both class C properties with high percentage of Hispanic tenants. I previously owned one other property of the same type in Garland with the same clientele. My leases are all more than six months minimum and no more than 12 months. I would be more than happy to answer additional questions if these were not the answers you are looking for.

I sold quite a few SFRs on owner financing. Not interested in doing multi that way. SFRs were F&C, so easy.

@Nick B.

The same agent that brought me the original offer that I accepted just emailed me. He has two buyers he is presenting the property to. An additional agent that brought an offer the last time around, has also asked for all the pertinent information and told me he has the same buyer purchasing more properties. I guess time will tell but having competing buyers with interest is always a good thing. I expect one other broker that I have contacted to also join the fun.

For the right buyer, I still feel I will get over $12 million offer. I don't think it will be much different six months from now. Time will tell.

@Nick B.

I guess I have multiple motivations for selling one of my buildings. I sold a large building a few years ago and nearly 100 SFR's. I have a good GST set up for grandkids and future generations and it is overfunded. I have been in real estate for over 40 years and I don't really have any other goals to reach.

I am interested in taking some chips off the table with this sale and if the market does suffer a large correction, I might be motivated to reenter the marketplace with my chips.

I purchased this building a few years ago for $6.2 million with 25% down. I have received net cash equal to the down payment and all the equity would be additional profit. The contract that just fell apart was for just under $13 million and I had four offers previously. Two of those agents have already notified me they have parties interested again. I have not quoted a price and will leave it up to the market. That is plenty of profit for me irregardless of the next sales price.

I just had an apartment transaction fall through yesterday due to changes in lenders requirements for buyer. The lender reduce the loan amount by $1 million and required a reserve account set up for 12 months P ITI, $725,000. There was no financing contingency in the transaction so buyer chose to forfeit significant EMD.

I have not verified but was told by another potential buyer that Chase bank is now requiring 18 months reserve for PI TI. This will change a lot of values on properties and ability and interest of buyers to purchase, in my opinion.

@Mohima Khanom

I'm not on bigger pockets very often and did something wrong. One of my previous emails got posted again by accident and I don't know how to delete it.Moderators have my permission to remove it. It doesn't need to show up twice

I agree with Ray about age. It makes no difference at all. I bought my first property, a duplex, when I was 21 or 22 In Orange County, California. I exchanged it six months later For a Porsche, a small house, one thousand dollars and a note and my real estate career was off and running!

I don't have any magic locations to place money for high returns. Many banks in Europe and the United States are getting close to where the interest rate is a negative interest rate. This means you make nothing on your money!

One of my favorite real estate books was the first one I ever read. It was written by William Nickerson and was called how I turned $1000 into $1 million in real estate. It was fascinating to me. A short time later he wrote a second book called how I turned $1000 into $10 million in real estate. Same formula but just more time involved.

It was the book that motivated me to quit college and get into real estate. I was a young married man with two kids under the age of two when I started. Nickerson motivated me to do the same thing using his same formula. I was lucky enough to retire at the age of 29 and my bio shows the book I wrote, chronicling my history in real estate and how I retired at such an early age. It is more of a motivational book with specific methods I used.

Knowledge is the first thing you need to stay out of trouble and the least expensive! There are many books online that you may try out first and also read reviews about the content. I'm glad I found the book I did and have continued with real estate Investing throughout my life.

Good luck.

Rich

I hate to throw water on your fire that you are a lot of obstacles ahead of you. You didn't mention what kind of knowledge or experience you have in real estate. That is very important.

Employment situation is not good for you. It appears you have no job currently and will start as a trainee later this year.

I have looked at real estate during various vacations in the UK. I was shocked at the prices for what you got and had no interest. I think it would be a big obstacle for you trying to purchase something in the United States and living in the UK.

REITs have taken a beating and I have never been a fan of those. I have preferred to do a hands-on approach but I have the knowledge and experience to do that.

I can't answer the other things as to whether it would be a good investment are not because you didn't list anything. I'm unable to tell you what would be the minimum amount to save or what you should have in reserve.

I would suggest you spend some money and purchasing real estate books to gain knowledge first. If you gain knowledge you may find other individuals that would be willing to place money with you as a partner and you would not have to wait so long.

Good luck but I would tread lightly.

I bought my only self storage facility in Bonita Springs, Florida approximately 10 years ago. It was only 55% occupied and during the era when you would drive down Tamiami Trail, which is the Main Street between Tampa and Miami and see commercial strip after commercial strip empty. Houses were not selling. To create traffic in a self storage facility, you need houses selling. It always surprised me that both buyers and sellers ended up needing storage space. I even had a section we referred to as valet parking. There were many snowbirds that would leave their car inside our facility when they returned north.

When houses started selling once again, the occupancy increased quickly to 93% and I decided to sell on 1031. A storage facility is great cash flow but very little depreciation or write off to cover it. I exchanged equity into multi family in the Dallas area and made approximately the same cash flow. The difference was the cash flow was covered mostly by depreciation and no taxes owed.

Good luck.