I really have no idea. They are still there, I guess I could drive up and ask, but i’d be talking to mechanics. Our stupid state still requires car inspections, so I know that is what most of them do. I never take my car or truck to downtown, because they charge a pretty penny for labor. Like 60-90 dollars an hour! But I suppose a lot of the state workers probably don’t care. Raleigh is the capital of NC and we have way too many lazy overpaid state workers that don’t care.
Ever sitiuation is different but here's how I do this from a recent example.....Last weekend…
A couple had a property left to them from a death in the family NOTHING OWED ON IT…
The house was JUNK…WORTHLESS…but the LAND was zoned COMMERCIAL and was on a very busy street. The property WAS NOT lsited on the MLS…I got the lead from a “digger” of mine and called them.
I met them at the property on Saturday…I SOFT SELL everything…I NEVER push…So we talked and talked…I asked them what THEY wanted for the property??? She said $250,000…I said, I didn;t think anyone would come near that number and I also pointed out that a BANK would not finance a deal on the house because it was failing down…That meant they needed a CASH BUYER…
I asked them what the intended to do with the proceeds from a sale??? ALWAYS, ALWAYS ASK THIS QUESTION!!!
They said they’d probably just pay off their own house…I asked HOW MUCH DO YOU OWE ON IT??? They said $75,000.
I explained to them that they needed to look around and see what was selling in this area…It wasn’t commercial property…It was STARTER HOMES…I told them that right NOW would be a perfect time to SELL this albatross and use the $75,000 to PAY CASH for a 2 bed house…RENT IT OUT for $1200/month…In 5 years when the real estate market is better…Look at where they would be…The house would have generated $1200/month x 12 months=$14,400/year X 5 years=$72,000…So, 5 years from NOW you could have, not only your $75,000 back…But ALSO a home that by THEN could be easily worth $140,000…Take the $72K add in the $140K and you have $212,000!!! The property you have here is UNRENTABLE…USELESS…SELL IT and BUY something during one of the WORST real estate busts in history…HOW DO YOU LOSE???
You could SEE the light bulbs going off in their heads!!!
It made SENSE to them…They could understand it…Will it work out exactly like that??? Probably NOT…But THEY could SEE the end game…The numbers didn;t include taxes or anything else…But so what??? they keep the place 8 years, THEN sell it…Either way they could SEE the potential there!
They called Monday morning…We signed a sales agreement for $75,000!!!
I love this soft sell stuff…
You are vicious fdjake…vicious…
if we meet at that Coast Guard restaurant up your way…I may need to get one of those silver heavy biker chains for my wallet…
lmfao…
-Mike
John,
A couple of thoughts here…
First: Was this service station ever a GAS STATION??? If they ever had UNDER GROUND TANKS there MAKE SURE you have documentation from EPA that the ground passed all testing…If it was NEVER a gas station also make sure there aren;t any contamination issues with the property. (dumping oil, anti freeze into FLOOR DRAINS) That’s why I NEVER put floor drains in my buildings…You’re INVITING people to dump nasty sh*t into them.
Second: If everything looks good enviromentally…You said it sold for $400K 3 years ago, which puts it at the PEAK of the bubble years…Now it’s for sale for $189K??? I thought you guys never had a BOOM down there??? A more than 50% price drop in 3 YEARS??? THAT’S BOOM/BUST pricing!!!
If those numbers are correct and comparable to what I’m seeing up here, even at $189K you could be paying full market value…You need to find out what OTHER repair shops are paying for their monthly LEASES.
Third: What did you walk away with from the sale of those 2 homes??? Dollar wise…HOW MUCH??? I ask because it an important issue if you’re dealing with someone that isn’t getting PAID for his properties…CASH is gonna be HUGE for him right now.
Fourth: If you do buy it: The first thing you do with this building is…
Have the entire outside painted…WHITE preferrably…Clean, bright and it contrasts nicely with the next thing you’re going to do…AWNINGS…If you have just ONE window or door (or mulitples) get AWNINGS up there…I use Greens or Reds…They contrast perfectly with the white building and white letters really stand out on them…THEY CAN TRANSFORM BUILDINGS!!!
I’d replace the garage doors too…Then the ENTIRE BUILDING looks new from the street. THIS BUILDING WILL GET A LOT OF ATTENTION AS YOU DO THIS!!!
Finally…Pay a seal coat company to come in a spray the entire parking lot and stripe it…This willl blow your mind!!! Dark Black lot against a bright white building with some color thrown in on the Awnings!!! HOME RUN for ANYONE looking to have their BUSINESS stand out on that road…And THAT is EXACTLY what BUSINESS OWNERS WANT!!!
Then step back and look at your NEW BILL BOARD!!!
Here’s what I LOVE about commmercial real estate…
The ENTIRE time you’re out there PAINTING, having AWNINGS installed, installing new garage doors…You have a BIG SIGN out front that says FOR LEASE…The entire BUILDING has now become a BILL BOARD!!! Business owners renting from land lords that DON’T take care of their buildings will be DRIVING BY EVERYDAY and start THINKING!!! So will their CUSTOMERS!!!
The daily progress on this building will draw HUGE ATTENTION…Make sure you’ve got a PHONE NUMBER on that sign because you WILL get calls…MAKE SURE your contractors keep the front of that building CLEAN and CLEAR of CRAP…Put the DUMPSTER BEHIND the building…You don;t want ANYTHING blocking the view to “THE SHOW”…The TRANSFORMATION is what will get this building RENTED for you…I won’t even let my contractors park their TRUCKS in the front of these buildings!!!
DON’T BLOCK THE VIEW!!! People LOVE seeing these buildings TRANSFORM as they drive by everydayand everyday it looks BETTER!!!
Every single one of my buildings got this treatment…Every single one was leased PRIOR to it being completed…Usually by the time you get it painted and the AWNINGS up the calls start coming in…I make sure my AWNING company leaves the most prominent window UNFINISHED so the NEW TENANT can put their business name on that AWNING…They usually install a temp front that says YOUR BUSINESS NAME HERE!!!
All totaled…A cosmetic rehab done like this MIGHT cost you $5000-$8000…and most of that is for the awnings and garage doors.
Building like this are ALWAYS in demand because the BUSINESSES that lease them usually do well in RECESSIONS!!! (Repair shops)
I put a 5% anniversary rider in ALL my leases…The rent goes UP 5% every year UNLESS the tenant notifies me in WRITING 30 days prior to the lease anniversary that they are MOVING OUT…That 5% ADDS UP over the years and having it in the lease removes the negotiations…They signed it…That’s the deal…If the LOCATION is GOOD and the BUILDING has INCREASED their BUSINESS…THEY AIN’T MOVING…Their PAYING the 5%…HAPPILY!!!
And JOHN…NO MORE NIT WIT DRUG ADDICTS…NO MORE SMASHING DISHWAHERS…If they don’t PAY YOU??? You decide to put 10 DUMPSTERS around YOUR BUILDING to do ROOF MAINTANANCE!!! I did this to ONE GUY…ONE TIME…He was Late paying his lease every month…One MONDAY he showed up to work and the entire BUILDING was surrounded by DUMPSTERS…I told him that this was the LAST TIME he would EVER be late with his rent again…OR…These dumpster would be here until he went UNDER!!!
SURPRISE…NEVER LATE AGAIN!!!
Try doing THAT with residential rentals…You’d be in JAIL…Not in COMMERCIAL…It’s MY BUILDING…NOT HIS HOME!!!
Pete thanks again, I can assure you I will be following your advice on this if I can get this thing. I was told it was never a gas station.
I did a covert inspection of the building yesterday, it’s a 5 bay that has been built on to not long ago. The old part built in 1958 is a block with shingle roof that has been redone probably at the same time they built the other 3 bays on the side, which is a metal building with shingle roof. I’m guessing the additional part was built on around 2004. It’s on a one acre lot. It looked to me every bay had a hydraulic lift build into the concrete slab. I’m guessing that belongs to the owner, not the tenant, that I will more than likely be evicting. According to the tax records that lot alone is worth 182K. Total assessment is at 378K, but its very common to see commercial buildings in this part sell for way more than the assessment. The price is 200K now, it’s a real long story on that one. Attorney has cleared the title for me already. I am working with only a little over 100K cash. So that means a loan, which is what makes me the most nervous about this deal. I have no idea what my banker is going to say to this one. I’m gonna call him, but the standard answer for this is “it’s tough out there, send me the contract and info and we will see”. I’m gonna look like an A$$ if I can close this deal.
It's rented now but I don't think they are paying. The current owner can't pay his bills because of so many non-payer commercial tenants.
John, I don’t mean to rain on your parade, but Pete is laying it on pretty thick and you really need to consider whether there is demand for this property. The tenants aren’t paying - not good. The current owner has so many non-paying commercial tenants that he can’t pay his bills - is that because the current owner is incompetent or is it that business owners are under a lot of stress in your area? Unlike residential rentals, commercial property can literally stay vacant for YEARS!
Last sold for 400K about three years ago. Previous owner financed it that I would be buying it from. I have a price of 189K. Would you guys do it?
Has the previous owner already paid the note down to $189K (from $400K) in 3 years? If not, can he really sell it if he is upside down?
Pete gave you great advice about painting the exterior; improving curb appeal; and turning the property into a big billboard - but IS THERE DEMAND or will you end up in the same predicament as the current owner?
Here’s an article primarily about the trouble the banks are in as a result of commercial loans: http://www.theepochtimes.com/n2/content/view/30405/
The point I would take from the article is not about banking, but rather the underlying problems in the commercial sector that is causing all these commercial loans to default.
Again, my point isn’t to suggest that you shouldn’t do this deal, but rather to counter some of the hype being posted by Pete. I would just be sure that there is demand for the building, unless you are willing to pay for a vacant building until the economy recovers (which could be a decade or more).
Mike,
Point taken, and a great one at that. The best way I know to gauge demand, is driving around the area trying to locate similar properties nearby that were vacant and/or for lease. I found maybe 9 or 10 of what I would consider similar, and no vacancies, you have to drive pretty far up that road, which is really a different area geographically speaking, then yes I found TONS of office space for lease, and some retail and a two restaurants, but this is an area of strip clubs and heavy industrial. It’s well known that this area of raleigh is dead. I’m all ears on other ways to gauge demand.
That 400K dollar loan (actually 330) has been wiped out through foreclosure, how I was alerted. The now tenants bought it and didn’t pay the owner financing. Now they are renters again, but there is still one loan on that is an old one. It’s sorta complicated buy my attorney is good and has it figured out.
JOHN…
I’D BUY THIS THING IN A MINUTE!!!
Think about it…You currently own NUMEROUS residential rentals that are a PAIN IN YOUR @SS…Sell a few of them and PAY CASH for this property!!! NO MORTGAGE!!! A property like this selling for LAND VALUE???..THAT’s a freakin STEAL!!! How much would it cost you to BUILD it??? Land + STRUCTURE…NO WAY are you building a 5 bay garage with lifts, office, and ONE ACRE of LAND on a BUSY Commercial Avenue for $200K…NOT HAPPENING! So you grab a $100K loan and DUMP a few more of your pain in the @ss rentals…Then PAY OFF the commercial property, which means NO MORE LOAN!!! SHOW ME HOW YOU GET HURT HERE???
I’m not even gonna get into the OTHER uses for this ONE ACRE PARCEL!!!
Does the company CVS or WALGREENS ring a bell with you?..That is EXACTLY the size LOTS they BUY for their DRUG STORES. Rent it out as a garage for a while…10 years or so from now don’t be surprised if that ONE ACRE is worth a LOT MORE than all your residential trailer rentals COMBINED…How many ONE ACRE lots are on this road??? Is it a BIG LOT for the road or a small one??
Here’s a PREDICTION from someone that actually DOES THIS…YOU’LL NEVER GO BACK!!! You’ll have EVERYONE of those houses you own on the market within a couple of YEARS!!! And you’ll wonder WHY you ever waited so long to do this!! Again…I’ve been doing this for 24 YEARS…I have a LOT more experience at this than Mike does…He has ZERO experience in commercial property.
John…If YOU can’t close this deal…CALL ME…I’ll close it!! CASH!!!
Here’s a TIP…
There’s NO VACANCIES at your area REPAIR SHOPS because we’re in a RECESSION!!! I rent to 5 of these businesses and their all BOOMING right now…When people CAN’T BUY a new car…THEY FIX THEIR OLD ONE!!!
If the owner of that building ain’t getting paid…HE’S AN IDIOT!!! Mike THRIVES on these situations in residential rentals…My guess is this guy has other commercial property that consists of RETAIL SPACE…If he has office space or RETAIL he would be hurting right now. That end of the market is DEAD. But that’s NOT what this space is!!
A 5 bay repair garage during THESE times ain’t gonna last long when the FOR LEASE sign goes up in front…DO NOT be surprised if one of the other ESTABLISHED businesses MOVES to your location for better facilities, better traffic, better visibility (assuming your property HAS those features)
Another point…For a REPAIR GARAGE…Having a ONE ACRE parcel is HUGE…These palces ALWAYS have customers cars sitting around waiting for repairs/parts, ect…Having all that PARKING is a BIG plus for a repair shop!
Here’s an interesting news clip from Raleigh N.C. on this very subject…
John,
If FDJake’s right, this could be a very good deal. If he doesn’t understand your market and he’s wrong, who will be taking the loss? Again, I’m not saying it is or is not a good deal. All I know is that FDJake is shoveling it pretty deep! It’s up to YOU to do the due diligence and determine the facts.
Sort of like I SHOVELED IT when I told JOHN to buy FORD STOCK last January???
He LISTENED then…Only THAT TIME he didn’t use REAL MONEY…So he watched a $100,000+ PROFIT being SHOVELED OUT OF HIS ACCOUNT!!!
My feeling is JOHN is getting a little TIRED of following the…
LET’S SIT ON THE SIDELINES ADVICE!
But Mikes right on some points here…You need to do your research…BUT honestly…I’ve been IN this business…Repair shops do well in bad economic times…UNLESS you run a shop that screws people…If you do that…You’re DONE…Especially in a bad economy.
You’ve got 2 repairs shops named in this piece…Do some DIGGING…Find out WHY one shops business is UP and the others is DOWN…Is it LOCATION or REPUTATION??? If the second guy in that piece has a bad rep…THAT’S why his business is down and the other shop is a better barometer of activity for these businesses…
I’ll tell you RIGHT NOW where you can go and get COMPLETELY UNBIASED opinions on whats happening to repair shops in your area…
AUTO PARTS STORES!!!
They SELL to these guys…ALL OF THEM…Ask a few parts suppliers how BUSINESS is these days, and ask how the REPAIR shops are doing in the area…THEY KNOW…They BILL those repair shops for parts…If everyone is LATE paying things aren’t good…If the PARTS STORES are BUSY…So are the REPAIR SHOPS!!!
Now how come MIKE didn’t give you THAT ADVICE???
Answer: Because he’s got NO EXPERIENCE in this BUSINESS…
Tae advice from people who KNOW what they’re talking about from EXPERIENCE.
I’m not giving anyone advice to sit on the sidelines, however I do think he should do his due diligence and not buy something due to peer pressure he’s getting on the internet. I know that I’m not buying anything just because you or Rookie think that I should. Also, just because you type something IN ALL CAPS doesn’t make it right.
Furthermore, while you were right on the Ford stock, you were wrong on the QQQ Puts and if he followed that advice he would have LOST a bunch of money. All I’m saying is that no-one, not you, not Rookie, and certainly not me, that are 100% right all the time. My advice is to do due diligence and only play when you know you’re going to win.
I agree with your advice on quick flips. I think that’s very smart in this economy, especially if you don’t want to do rentals. In fact, flipping is probably less risky than rentals right now IF you have a job to fall back on if flipping falls apart with the economy. If I am right about the economy collapsing in the next couple of years, then there will be significant risk with a rental property business. Flipping one deal at a time offers very little risk if you buy right, provided you get out quick and provided you have a job or something else to fall back on if you can’t live on flipping.
IF the garage is truly being sold at a big discount and IF there is demand for it and IF it doesn’t have environmental issues - then it could be a good deal. But John needs to do his due diligence since he’s investing HIS MONEY.
According to YOU…You’re not buying ANYTHING…PERIOD.
You’re on the SIDELINES!!!
I just gave him SPECIFIC ADVICE on EXACTLY how to due his research…
YOU GAVE HIM NOTHING!!!
NOT A THING!!! Z E R O… Not even a IDEA on HOW to research a COMMERCIAL PROPERTY…But how could you??? YOU don’t have ANY experience doing that!!!
Oh and Mike my Profits on GOODYEAR alone…CRUSHED the loss in those Q’s…Check the posts…THAT investment was ALSO laid out here in GREAT DETAIL…And you’re the guy that sold ALL your Ford stock at what??? $3 change??? NICE!!! And ONE LAST POINT…I NEVER told ANYONE to buy Q’s…It was a trade “I” made and I simply posted it here because YOU asked people to POST their trades…The ONLY stocks I have EVER recommended here SPECIFICALLY were FORD and GOODYEAR…Get the story straight.
My current position in Ford is closing in on the 7 FIGURE MARK!!! So don’t lose any sleep worrying for me about that Q loss.
John,
How about just driving down the strip and asking the garage mechanics how is business and if they need more bays and room to park used cars for sale? That should give you a pretty good idea of demand. Also, why not see if any used car lots places need a new location? Or, maybe do a combo used car/ car mechanic location where you have one owner doing fix up work and another selling used cars. I’m just throwing out ideas here.
Also, how is the traffic flow during different times of the day? Keep an eye out for the other garages during various times of the day and see what they are getting for drive in business.
I’d also want to know why the current tenants aren’t doing business. Is it a marketing problem or a reputation issue. You can make a batter assesment after you start getting some answers.
According to YOU....You're not buying ANYTHING.....PERIOD.You’re on the SIDELINES!!!
I am not buying anything else. I am NOT on the sidelines. I have a rental property business that is doing quite well.
Oh and Mike my Profits on GOODYEAR alone.....CRUSHED the loss in those Q's...
Good, maybe from now on you could tell us which of your predictions will come true and which will crash and burn.
I honestly can’t understand what you’re arguing about? Did you have a bad day? I am agreeing with you about the flipping. I am agreeing with you about the garage, if the due diligence pans out. I am agreeing with you not to sit on the sidelines. Maybe those commercial properties are getting to you after all! Not quite as stress free as advertised? For someone who claims to have made a big pile of money on stress free investments, you certainly seem unhappy.
Or maybe it’s just YOU!!!
Maybe it’s YOU telling people here I’m “SHOVELING IT ON” or “LAYING IT ON PRETTY THICK” and “HYPING an IVESTMENT” When in REALITY… YOU have ZERO EXPERIENCE doing this…ZERO!!
I DO have a problem with a person that has NEVER OWNED a SINGLE PARCEL of commercial property telling others I’m “HYPING AN INVESTMENT”
I have NEVER done that HERE or ANYWHERE ELSE.
I take my reputation very seriously…If you want to FLUSH yours down the TOILET with your RIDICULUS RANTS about coming FOOD SHORTAGES, RIOTS and the COLLAPSE of OUR COUNTRY…BE MY GUEST…But when you start running your mouth about ME…Yea…I have a BIG PROBLEM with that.
You were completely OUT OF LINE here. Don’t ever insinuate that I’m HYPING some investment.
So in the END…You have NO IDEA what you’re talking about…But why let that stop you from taking a few cheap shots at me?
Then you claim “I” have the problem.
INTERESTING
Not that I expect John in NC to throw me under the bus, I advised him the other day to not buy the said property…Not that my opinion matters any because I have the least real estate experience here…I just know that cash is king right now and I hate being any kind of landlord and I want assets for nothing…And the price for the commercial property doesnt seem cheap enough for me IF John is making a cash offer…A cash offer on that property from me would be in the 120k-130k and let them negotiate it higher…Cash is king…But if someone lets me steal (not literally,but buying very cheap) from them I will gladly do it…
Isn’t it interesting that YOU are the only one in the world that knows what they’re talking about? I guess there’s no need for me to read what anyone else says, I’ll just check REIClub for the latest news from FDJake! LOL!
I think that you just like to argue. It doesn’t matter who you’re arguing with or what you’re arguing about - you just like to argue.
And just FYI, although I haven’t owned an auto garage, I have owned some small commercial properties. I owned a prime lot that I rented to a medical company and I simultaneously sold an easement to a phone company for a small corner of the property. I later sold that property to a restaurant that needed the property for a parking lot. In addition, I still own a small commercial building that was most recently rented to a company that did upholstery. Commercial is not my business and I don’t claim to have your experience in that area, but I don’t have “ZERO” experience as you claimed. Again, you are NOT the only one that knows anything.
Show me where I said “I” was the ONLY ONE that knows Commercial Real Estate???
We’re talking about a COMMERCIAL PROPERTY that involves the CAR BUSINESS!!!
What would I know about the CAR BUSINESS???
Well, I was just IN IT for over 15 YEARS, having OWNED a car dealership with a HEAVY REPAIR business for customers cars. I STILL own that building and STILL hold the dealers license in my company name (I LEASE it to a tenant) I ALSO own 4 other COMMERCIAL BUILDINGS that EACH have auto repair related businesses in them…I BUILT 2 of those 4 buildings from the GROUND UP…Purchased the land, developed it, obtained the permits, designed the lay outs, acted as GC for the construction…THEN found the TENANTS!! I FOUND those TENANTS by GOING DIRECTLY to businesses in OTHER BUILDINGS and SHOWING THEM MY LOCATION and FACILITIES…That’s how I found the FIRST tenant on my first spec building…The REST CAME in during the REHAB or CONSTRUCTION phases…You know, just like in the POST I WROTE on HOW TO SPRUCE UP THIS BUILDING to attract a TENANT!!
Want another one??? I put WASTE OIL heaters in EVERY BUILDING I lease to AUTOMOTIVE BUSINESSES…That ALONE has brought in tenants…A waste oil heater runs on USED MOTOR OIL and transmission fluid…It can also run on regular heating oil, but for a CAR REPAIR BUSINESS that is constantly producing waste oil and having to PAY someone to take it off their hands, having a facility that installed these heaters is a DOUBLE savings for them…No cost to dispose it and it’s also HEATING the building which drastically cut ultility bills! It’s a double win for me too…I don’t have to worry about someone dumping motor somewhere it shouldn’t be and the tenants LOVE the systems…Believe me…These guys learn REAL QUICK that every DROP they pour into that tank is MONEY NOT coming out of their POCKET!! And If that auto business moves out…Those heaters LOVE running on regular CLEAN heating oil. Everyone WINS!!!
I’m sure you could just dismiss these tid bits I’ve given away for free here as HYPE…But whatever…Want to know someone that WON’T DISMISS IT???
YOUR FUTURE TENANTS!!!
Anyone that has been in the repair business knows a few important things…And if YOU know these things…THEY WILL LEASE YOUR BUILDING!!!
- A good location with a GOOD LOOKING BUILDING attracts ATTENTION! ATTENTION attracts CUSTOMERS!!!
- A well thought out building, designed with EXPENSE SAVING features, means MORE PROFIT for that tenant.
- A buiding that is located on a busy Avenue will have many OPTIONS for that owner and tenants as time goes by. That garage is just the beginning.
But what do I know???
First off, THANKS for the help from everyone! I enjoy the opposing views here. There are a million things running through my mind with this but I am pretty confident of this property. Tommorrow or monday, i’m going to try to buy this thing. There are two negatives i’ve discovered in my digging. 3500 of back taxes and it’s in a flood zone. Neither are that big of a deal to me. Flood insurance is going to cost around 3K a year from what im being told. If anyone knows different on commercial please speak up! I’m wondering if my local bank will even know and make me buy it?
Well thanks again, and I’ll report back on my progress with this property.
Well I bought it! wish me luck! I’ve been told by more than one real estate professional this is a hell of a deal.
Congratulations! I hope you make a big pile of money!