If you could buy a bldg for 200K that was worth 500k would you offer 150k and take the chance of loosing the deal to another investor or offer the 200k and run with it?
It depends on what you are going to do with it. If you are going to put it right back on the market and it will sell in 3 days for $500k then I would buy it for $200k. If I would have to put 6 months and $300k into it to get it to sell for $500k I would offer less. It depends on the deal. You need to do some math to decide what you want to do.
Why be greedy and take a chance of making nothing?
Thank you thank you.I just lost a deal because I offered a crazy low offer that I was embarresd? of which cost me the deal.I would rent it .It is an office bldg that needs about 50k to get up and running
If you are looking at the building to hold and rent, then the real question you should be asking is at what price do I get positive cashflow from it. That is what will govern the price you are willing to pay. If the building is “worth” $500k but won’t cashflow unless you get it for $150k, then it is only worth $150k to you.
Also, don’t morn a deal that you miss that would take it out of your comfort range. A deal is not a deal if you won’t make you money. It may fit for some other investor’s situation and he should get it. This is not about buying a building for the heck of it, it is about making money. If your financing, or cashflow requirements are only met at the price you bid, and someone else outbids you, then you don’t want it anyway. Don’t buy yourself into a pinch.
It is like if you had a chance to marry Angelina Jolie, even if you get her, you know that Brad Pitt is going to beat you out eventually. You may as well let her go. You can marry…whoever you married.
If there is legitimately $300k to be made I wouldn’t blow the deal trying to be cheap…a bird in the hand, etc. You have to ask yourself why it’s for sale for less than half of what its worth or is there a good reason the guy needs a quick out? What is required to get this thing saleable? Is it trashed inside and needing a massive rehab?
It is like if you had a chance to marry Angelina Jolie, even if you get her, you know that Brad Pitt is going to beat you out eventually. You may as well let her go. You can marry…whoever you married.Yeah but even if Brad Pitt did eventually steal her he'd at least have fun for a little while. :o 8)
I would just kick Brad Pitts…
Or at least take the $300K I made off that building and pay someone to do it.
;D
Bruce
The property was bought at tax forclosure by the city it is in . The city is selling it.No it does not need a huge amount of work. It has been vacant for 4 years due to litigation.Now it is ready for sale and the city just wants it back on the books.
You seem to be getting desperate to buy something. I agree with Bluemoon wholeheartedly that IF IF IF the property is truly worth $500K AND needs no repair (highly unlikely after being vacant 4 years), AND could be sold quickly at full retail, then I would have already bought it! However, all of those are conditions are highly unlikely.
Moreover, commercial properties are a completely different animal than residential real estate. Commercial properties can stay vacant for what seems like an eternity, destroying your cash flow along with your life. I personally know of several commercial buildings that have been vacant for several years. They wouldn’t be a good deal even if someone gave them to you. It is absolutely necessary to thoroughly understand the market before jumping into commercial real estate.
You seem to be pinging off the walls. One minute you’re talking about 20 houses and the next minute an office building. My suggestion would be to pick one field and build some experience and success before jumping blindly into something you’re unfamiliar with. Being in a big hurry to spend money is a sure way to lose it!!!
Good Luck,
Mike
I would have offered $225,000 to ensure I got the deal.
propertymanager,
I do understand the need for careful execution of a business plan.My,like everyone else here, plan is to make money.There are a million ways to do that .I am anxious to make MORE money now that I have specialized in the rental market in Florida.However the market has changed so therefor I must change my tactics.Before I bought my first house I spent countless hours day in and day out researching and planning on how I was going to start my investing carrer.When I felt I was ready I went for it.This question
ing I do here is to educate me on what other investors are thinkin and doing and what is working for them.Taking the necessery info from each post and putting into a calculated, educated highly researched , business plan to execute.You may not be ready or have a need to expand or change your tactics but I guarentee that when you got started you asked a million questions,and if you ever decide to venture into a new area of practice you too will be the one that looks like a superball.I have money to spend and I have the ambition to succeed as I have to this point .Now I need the education to make it happen.Thank you for all your insight as it is exactly true to the extent that you can see through the eyes of a text screen.But do not construe ones desire to succeed for ignorance or inexperience.Asking about 20 houses and then commercial and then building a laundromat are all different ways of creating money and I will never know what is best for me if I dont ask.Most people get an idea in their head to open a bar or open an antique store or start a rehabbing carrer and then look into it a little and say Heck Ill never be able to do that. Me,I get an Idea in my head to make money.regardless of what it takes.I adapt very easily.I have a desire to be financially independent .NOT a pizza maker or a sales man or a truck driver.I respect your opinions and I have learned a lot from your posts along with otherslWhen I bought my first home my dad just shook his head and walked away .Today he calls me daily to find out what we are going to do next.I dont have a college degree he is an accomplished physician of 42 years. Keep the posts coming even if you are calling me a cook between the lines it keeps me on my toes .Thank you.
Dave
Who said it doesnt need any repair? “it does not need a huge amount of work” remember ?
Dave,
Why so defensive about the responses to your posts? You are asking questions and people are answering them honestly, trying to help you.
People are assuming that you are a newbie because the questions that you are asking are those of a newbie. There is absolutely nothing wrong with asking newbie type questions, but expect appropriate answers.
A good example was this question about the office building. You basically asked what you should offer on that building, but didn’t provide enough information to answer that intelligently. An experienced investor would know that you need cash flow information to answer this question - thereby making people (including me) think that you are very inexperienced. Would I pay $150K or $200K for something that was truly worth $500K? Yes and Yes!
Mike
AHHHHHHHH always on your toespropertymanager.Perhaps you misunderstood my last post.It was meerly a correction of the facts. The post before that,(the long one) was simply a correction of the facts again.Maybe we are getting lost in the undertones of crass wit. I picked up the paper( small business monthly)and right there on the front page it says " RISKY BUSINESS" there is a little risk taker in every successful business owner.Music to my eyes 
My newbie questions are simply that .Newbie questions from someone experienced in one field and trying to break into another.What is commercial? how is commercial? where is commercial?does commercial work better than residential?why would I buy 50 houses with 50 tenants for $10k =/- month on 39 different streets if I have financially made it to the point where I can buy 1 20k sqft blding with 1 or maybe 2 tenants on one street for about $14k per month.Why wouldnt I ,…because Im scared ,yes…because Im uneducated in that field,yes…because others tell me its crazy,yes…Well Im no longer scared as I feel I have educated myself to the beginning point and untio I get some direct hands on from this point Im going to suffer from parralasis annalasis(spelling is not my best subject)I am financially ready to take the risk without loosing everything, And well Ill always be a little crazy.Yes commercial is a whole new animal but just like anything else “Your not ever going to get anywhere if you dont get out there and do it”.I would hope that you all continue to support my interest to better myself and help me with my newbie questions and heck maybe this will be a prime example of an individul who one can learn how to succeed from.Or maybe this will be and example of one of the biggest realestate trainwrecks to date.Whatever the case maybe I am on my way to look at my new prospect .I will post pics when I get some incase anyone is interested in show and tell.Thank you again See ya all tonight.Oh and propertymanager 
this ones on me 
http://www.reiclub.com/forums/index.php?board=32
You’ll get better info on commercial real estate at the above link.
I tried that bobo but the rplies were few and far between . The PRO’S like to hang out here where they can stand tall to the 'Where’s the wholesalers all at " club.
Well I flew to the city. Looked at the building and here’s what I came up with.The building is 26K square feet . it is located 2 blocks from a major city’s convention center. it needs about $350k conservativly worth of repairs.It could potentially bring in $27,500/month on a double net lease(utilities not included…too expensive to seperate)Average utility was $3200 when bldg was last used .(6 years ago)
,the fact that it was tax exempt when it was in use makes appraising difficult so the apparisal is way off ,So lets see.here in florida and I reallize the bldg isnt in florida but the rule of thumb and if anyone has a better “Rule of Thumb” please stick it up: is a $1 improvement is worth $5 in equity. (this formula has proven itsself time and again on a rehab type of projest)Well my question is does anyone have any clue as to estimate for value. Here’s some more stats.3 floors all set up in individual offices ,elevator,brick construction, concrete between finished basement and first floor,Three phase wiring, Flat roof ( needs replaced $72k) central air and heat,(needs upgraded $85K)26k sq feet, downtown in major midwest city,350k+population potential revenue $27,500/month gross $21,000 net.1 block away from wyndam hyatt, accross street from chamber of commerce, 2 blocks from county court house.2 blocks to convention center.not a lot of vacant bldgs.maybe 10 with in the general area 5-6 block radias.Any Ideas on value?
still looking for answer if anyone can possibly ?
I’m still stuck on the fact that it’s been vacant for six years. It might take longer than you think to fill it back up again. And your rehab costs are going to be way higher than expected due to ‘unforseens’.
It you are new at commercial, maybe something that is established may be a better first commercial property.