My next step in real estate

My best bet right now is a home literally 1 block from $1.4 million property above. It is a smaller lot. The home is $150k in value. Should be $400k of land value rezoned. It is on the frontage of our largest commercial street. But, on the edge of town. He called me and said they thought about moving in the past year and were interested. They were wondering if I minded if they needed more time to move. I said I had some time, and that I could pay them a little more to move sooner. I may go look at it in a couple days after he talks to his wife. He said he just wanted fair price for it.

 

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This deal, my personal opinion, if you want longevity in this business always pay fair market value for what you buy, be extremely fair to the vendor, curtious and non agressive in your approach and negotiations, treat them like royalty, your purchasing will get easier and easier particularly in a small town where word of mouth is key.

 

One question, can't you have them living in while rezoning the property? If you can agree on price, sign a contract, give them a deposit, ask for a long settlement (to line up with rezoning completion) have them move out just before or after rezoning is completed, that way your outlays are low and you are satisfying one of their conditions, win, win.

 

Good luck.

 

They called and we have a meeting scheduled Tuesday night at their house.

 

It could be rezoned while occupied, but they are unaware of the potential. If they figure it out, I'm sure that the price will go up drastically. I think it will be a couple of years before it's ready to use commercially, so I was hoping to rent it until then. As soon as the zoning changes, the county will screw me on property tax. I could actually avoid the rezone and let the commercial builder buy and rezone it.

 

My best case situation would be they say yes now to market value. However, I can see a couple possibilities I need to prepare for.

 

The first is price. I think it comes in at $150k and will eventually be sold for $400k, maybe a little less. I'm willing to go to $175k on the deal. So, that's set. I'll listen to them and then go up if I have to.

 

The second is time. They have pondered moving in the past year. I think they are ready because they have a buyer who is asking and no realator is needed. However, they have no place to go yet. This is what I don't know. It could be a 6 month ordeal, so my main concern is locking them in. My ideas are:

 

-close in a month and give them a couple months of free rent to find what they want

-if their offer is great, offer them $5-10k to make it happen sooner

 

My main concern is that I want to lock it in, as I KNOW someone with deep pockets will try to buy it soon for even more.

 

Any suggestions welcome :-) I'm guessing I'll express my interest in the house, and once they give the price, we will make an agreement. If time is an issue, I'll suggest one of the above.

 

So far they show a lot of interest but that can change.

 

I normally nurture whatever interests they have if they move on, they often do, I give them my opinion on what I think about the past interest then I move on with them and start supporting them again.

 

My youngest started with wanting to work in the supermarket at the cash register specifically until we told that the money taken in won't be hers to keep, as soon as she learned that she quit that idea LOL

 

I hated being pushed and I am trying my hardest not to do it myself, it's NOT easy

 

 

When I was little I wanted to drive the garbage truck because I thought they only worked one day a week.

 

When I was little I wanted to drive the garbage truck because I thought they only worked one day a week.

 

 

 

That's hilarious !

They called and we have a meeting scheduled Tuesday night at their house.

 

It could be rezoned while occupied, but they are unaware of the potential. If they figure it out, I'm sure that the price will go up drastically. I think it will be a couple of years before it's ready to use commercially, so I was hoping to rent it until then. As soon as the zoning changes, the county will screw me on property tax. I could actually avoid the rezone and let the commercial builder buy and rezone it.

 

My best case situation would be they say yes now to market value. However, I can see a couple possibilities I need to prepare for.

 

The first is price. I think it comes in at $150k and will eventually be sold for $400k, maybe a little less. I'm willing to go to $175k on the deal. So, that's set. I'll listen to them and then go up if I have to.

 

The second is time. They have pondered moving in the past year. I think they are ready because they have a buyer who is asking and no realator is needed. However, they have no place to go yet. This is what I don't know. It could be a 6 month ordeal, so my main concern is locking them in. My ideas are:

 

-close in a month and give them a couple months of free rent to find what they want

-if their offer is great, offer them $5-10k to make it happen sooner

 

My main concern is that I want to lock it in, as I KNOW someone with deep pockets will try to buy it soon for even more.

 

Any suggestions welcome :-) I'm guessing I'll express my interest in the house, and once they give the price, we will make an agreement. If time is an issue, I'll suggest one of the above.

 

Boner I know you are concerned about the taxes if you rezone it, could you just get a permit to rezone but not actually do the rezoning work now? If you can, how long is the permit valid for ?

 

Here I can get a development approval to rezone/build/develop a certain parcel, once I get it I can sit on it for two years, just before the expiration of those to years, for a small fee (few thousand) I can extended for another two years, you could virtually sell it with the development approval in place and allow the buyer/developer to do the works, you will obviously have to discount the value of the works from your selling price.

 

If such thing exists there this might be another possibility of you locking in the deal without having to pay out increased taxes.

 

Good luck.

Boy did I miss a good one. Fortis and I were chatting about something very similar over the past few weeks as well.

 

Please keep us updated on how things are progressing Boner. I'm going through many of the same steps you are at the moment.

 

Regarding the financing, would they structure it? as a commercial loan (where income figures mean more than personal backing) or more like a typical mortgage?

 

Even being here in CA I envy what you guys in the midwest can snatch property up for. Anything you can buy for $150k out here is surrounded by tumbleweeds and meth labs.

 

I need to sit down and try to get a formula together for some development costs, but I fear that buying existing buildings will be cheaper than building (for me). Teardowns for virtually non-existent.

 

At the very least this is all extremely intriguing. I hope you hit it big Boner!

Im still working with the bank. That seems to be taking longer every time.

 

The meeting went good. I gave them the appraisal papers from the county office, and also some comps. I let them know I was interested and that I would pay them 5% over market value, plus they wouldnt need a realtor, which would save them about $15k. The only catch is this....

 

I dont know if Zillow is a USA thing...but the house appraises at $136k. I do think the county is typically low, but the comps put it there too. Unfortunately, Zillow is placing it at $167k, and that is at least $25k from the reality. Zillow really throws a wrench into things. My home appraisals come in around $1.1million and they list it at $350k. Ha! Going to be hard to sell my house if someone see that!

Im still working with the bank. That seems to be taking longer every time.

 

The meeting went good. I gave them the appraisal papers from the county office, and also some comps. I let them know I was interested and that I would pay them 5% over market value, plus they wouldnt need a realtor, which would save them about $15k. The only catch is this....

 

I dont know if Zillow is a USA thing...but the house appraises at $136k. I do think the county is typically low, but the comps put it there too. Unfortunately, Zillow is placing it at $167k, and that is at least $25k from the reality. Zillow really throws a wrench into things. My home appraisals come in around $1.1million and they list it at $350k. Ha! Going to be hard to sell my house if someone see that!

 

Don't worry about zillow, it means fcuk all in most places. Really it's just an algorithm based on some recent sales (that they are super slow to post) and a few data points (sq/ft, b/br, lot sq/ft, etc).

 

If you want to be a little diabolical, since you know the name of the owners, log into zillow, claim the property as your own (it will only ask you to identify the owner by name as proof of ownership), and edit the details. I believe you can set your own estimated value as well.

 

I can't really comment on the county thing, the one area CA got right is your tax roll is based on purchase price forever. It only changes if you pull permits for improvements and just increases by the estimate on the permit.

 

Go off comps and use that as your negotiation point, everything else is just irrelevant bullshit.

I can't really comment on the county thing, the one area CA got right is your tax roll is based on purchase price forever. It only changes if you pull permits for improvements and just increases by the estimate on the permit.

 

Amen!

Im still working with the bank. That seems to be taking longer every time.

 

The meeting went good. I gave them the appraisal papers from the county office, and also some comps. I let them know I was interested and that I would pay them 5% over market value, plus they wouldnt need a realtor, which would save them about $15k. The only catch is this....

 

I dont know if Zillow is a USA thing...but the house appraises at $136k. I do think the county is typically low, but the comps put it there too. Unfortunately, Zillow is placing it at $167k, and that is at least $25k from the reality. Zillow really throws a wrench into things. My home appraisals come in around $1.1million and they list it at $350k. Ha! Going to be hard to sell my house if someone see that!

 

Great job Boner, good luck

Im in healthcare, which is ok. Been in it 15 years. Its a comfortable living but I feel like I am always waiting for the next insurance company to leave, or the next group that has a $12,000 deductible. I need a way out. It seems like the wealthiest people I have met have/had massive amounts of real estate. So, that is my strategy. As I drive through town, I think that *somebody* owns this stuff, and its not me!

 

I started 3 years ago in real estate. I now have 3 commercial properties. They are worth about $1,000,000 total and I owe $480k. That leaves me with about $500k of equity. This doesnt include my house, which I have about $500k in equity also.

 

For all of you that have gotten somewhere in real estate by your own means, what would be a good next step for me? I just dont know what a concrete plan should be to hit it hard. There is a family practice doctor that just built a $30 million dollar apartment complex by me. That is great, and I wonder how they got to that point. Hard work? Inheritance?

 

In my head, I will have everything paid off in 10 years at the current rate. At that point, I will have $2 million in equity and I will be 48 years old. My goal is at least $10 million in property. My problem is that I dont know if I need to wait until Im 48 and then use my $2 million equity to get a $10 million property loan? Or, do I use my current equity to strategically borrow now, and use these current 10 years.

 

Im a little lost, but would appreciate some experienced advice, if you dont mind. Im 38 now and wish I would have started this 15 years ago. Its a lesson that everyone has to figure out (and many dont). Im ready to listen!

 

There have been a few topics on CRE before on LP, I would suggest you do a search, some good info there on books/education and way to go. Houston was brought up, I own a few properties there actually I grew up there so I know the market well. The key to making money in this business is not to hope for appreciattion but to add value (clean it up, increase below market rents, etc) and work on cash flow. The market now is infested with buyers, I get tons of letters people wanting to buy my props, that is how I got started 10 years ago (sending letters ), off market direct deals (non broker), with a simple letter. I have many friends in the business now struggling to find deals. They are out there but you need to find them. Cap rates are ridiculous now, just try to find for an old uneducated seller.

 

Dont get to aggressive/inflated with getting a certain amount of properties in a short time, be smart. Many, many owners lost all their assets back in 08 for being nieve, companies that were around for 30, 40 years, big companies. Their is another adjustment coming.

 

Their is always opportunity to make money in CRE, need to find the right deal, take your time educate yourself but dont hold your breathe. Find other alternatives for income as well until that big deal comes in.

 

Start with Sam Zell, here is a good story to get you started:

http://www.nytimes.com/2009/02/07/business...rties.html?_r=0

Ok! Got my first deal! We have agreed on a price of $25k for a vacant 1 acre lot on the corner of TWO major roads. Within 5 years, I think it will be worth $300k+. I think I will build a modern modular style home, so I can rent out until then. Once it is bought by the developers, I can move the modular home to the sand pit I own and use it as a cabin there. I am so pumped! Hopefully Ill have it all in writing in the next day!

Congrats! Super pumped for you.

Ok! Got my first deal! We have agreed on a price of $25k for a vacant 1 acre lot on the corner of TWO major roads. Within 5 years, I think it will be worth $300k+. I think I will build a modern modular style home, so I can rent out until then. Once it is bought by the developers, I can move the modular home to the sand pit I own and use it as a cabin there. I am so pumped! Hopefully Ill have it all in writing in the next day!

 

 

Damn at $25k an acre can I send you some money?

Congrats! Super pumped for you.

 

 

Nice job!!

 

 

Damn at $25k an acre can I send you some money?

 

I am closing on the property on Monday! I will sit on it for about 3 years. A lot just sold to a church 1/4 mile down the road for $185k per acre, non-frontage. So, this will be high profit. The corners 1 mile away are going for $500-800k.

 

I would like to park something on it in the meantime to rent. I was hoping it would be something small that I could move to my cabin later. I would love to buy some shipping containers and make some ultra modern rental. This solves a few issues. I could unbolt it and take it 30 miles to my cabin when the property gets developed. Its also easy to move the shipping containers (no road permits needed). The only catch is figuring out if this is legal. Ive seen many online. But, not local. We are behind the times when it comes to that. I think this is cool:

 

 

 

That is cool, who makes it?

Very cool cabin design! I know here in Dallas it is illegal to use shipping containers.

I officially closed on the property today!

 

Only glitch I will have...It looks like FEMA is expanding their "floodplain" onto the property in a few months. Its an absolute joke. They dictate what they want to set levels at and force structure owners to pay into the pool. This wont matter to me, because it is vacant land. It wont matter to the developers either because a 1' tall pad to pull it out of the flood plain.

 

So, I will just be hanging onto the property until the developers come in. I could develop the pad and remove from the flood map for $50k. It wont really get me more, as the big box stores will have to wipe out the entire area for specifications. I think it may be smarter and just sit on it awhile and see what kind of offers they give me in the next 3-5 years.

 

On to the next property.... :-)

 

Anyone have stories they can share?

That's fantastic, congrats

 

 

Well...I am making progress on my land deal. It is kind of a long story, but I am getting utilities on it now. The weather has slowed it all down.

 

In the meantime, I own a sandpit and something odd has happened. It wasnt for sale, but someone very wealthy is moving to town and they want one. The word spread that we owned it and he is interested. This literally happened yesterday and he got my keys today. They are looking at it as I type. If this deal happens, there will be a $500k cash profit I can reinvest.

 

Im having mixed emotions about this. But, a life free of obligations is even better. I think Fortis said it was just more zeros behind a number. Im hoping that this may happen and I can make the next deal.

Well...I am making progress on my land deal. It is kind of a long story, but I am getting utilities on it now. The weather has slowed it all down.

 

In the meantime, I own a sandpit and something odd has happened. It wasnt for sale, but someone very wealthy is moving to town and they want one. The word spread that we owned it and he is interested. This literally happened yesterday and he got my keys today. They are looking at it as I type. If this deal happens, there will be a $500k cash profit I can reinvest.

 

Im having mixed emotions about this. But, a life free of obligations is even better. I think Fortis said it was just more zeros behind a number. Im hoping that this may happen and I can make the next deal.

 

Congrats!

 

Is there oil in that sand pit?

Congrats!

Congrats!

 

Is there oil in that sand pit?

 

There is some in the area :-)

 

Mainly salt mines. They go hand in hand. A few dinasour bones have been pulled out of there. I gave one to my kids dentist a couple months ago. Was a mastodon molar. Didn't realize they were worth $800 each in that size :-/

I finally finished up my first residential project. I decided to build a small rental on the acre lot. The land should be rezoned commercial in about 5 years and Ill be making money on it until then. I did waste some time doing this, but I wanted to learn some of the building regulations and meet some contractors that I could trust. I must say, dealing with sub contractors is extremely frustrating. I have too many bad stories to post. I had to fire a few people. The most frustrating part, however, are the county inspectors. One example... he didnt like the placement of a toilet so he made me move it 2". Keep in mind it was in concrete.

 

I must say that I am satisfied with the results. It is a reclaimed space with a slightly modern edge. I was able to get a year contract in 3 days and had a waiting list. Its 1000 sq ft, 2 bed / 2 bath, and Im getting $950 per month. They pay all utilities. I have $80k in the project, including the acre lot that is wooded. The house is all electric and has blown foam insulation. Pretty efficient. No Sheetrock to break. No paint. No flooring. About half is redwood and half cedar. It has 12 foot ceilings and the front door is almost 9' tall. I also added 2 cupolas with antique lightening rods. I would have gone a little bigger and I usually like extreme roof pitches, but I wanted to make this moveable in the case I get the chance to move it to my sandpit when the area is developed. The kids named it "The Dojo".

 

Now to find the next deal :-)

 

Congrats! I like the door with the rollers up top. The interior has a serial killer vibe, COOL!