There's property I want to buy. Seller wants $1.2 million, I think it's only worth $725,000. Its an old brick building with no functional HVAC or plumbing equipment.
Do I get a third-party to assess the property to get a neutral opinion of it's value, or do I go forth assume this property is overpriced?
[ - ] clymer 1 point 6 monthsNov 19, 2024 05:16:47 ago (+1/-0)
Walk away all together. Commercial is just about to go through the floor boards. Your intuition is screaming walk away. If you find that you are arguing with your inner self over pro's and con's of a decision like this, wait for an opportunity where you are not split in two different directions. Every time I have pulled the trigger on a decision like this, it's been regrettable
I don't know shit but it sounds like the owner knows something you don't. Why wouldn't they just fix it up themselves and sell for top dollar or lease for return on their investment. A developer I worked with years ago sunk big money into fixing up an old Honeywell plant that was going to be turned into a huge business and everyone involved was going to be filthy rich and live happily ever after. Then local politics said nope and completely killed the entire project for no good reason other than the kings of the city didn't want it to exist. Like I said, I don't know shit, but maybe do your due diligence and homework before turning in those papers and getting stuck with someone else's headache. Unless you have fuck you money, then do what ever gets you off
Why wouldn't they just fix it up themselves and sell for top dollar or lease for return on their investment
If my understanding is correct, the seller wants a pile of money and walk away. He owns two restaurants and this was supposed to be his third...he's not necessarily skilled enough to be a landlord.
Thursday the building inspector will walk-through with me to give a better verdict.
Its an old brick building with no functional HVAC or plumbing equipment.
OR
I think it's only worth $725,000.
OMG, a fixer upper commercial building. The permits to do any of the plumbing or HVAC are going to be $1200 each if that answers your question about justifying the appraisal.
What I'm trying to say is that an appraiser can appraise it for whatever he wants/thinks and that's irrelevant to the current owner. It might be important to the bank but I don't think that's where you're going with it.
None of us know enough about the building to make an honest assessment of it. The location, purpose or condition other than it needs work.
If YOU think it's worth it, throw in an offer, they can only say no and you lose nothing.
I missed some opportunities during the Obama Recession that I really regret but I'm not worse off for not taking them.
[ - ] BoozyB 1 point 6 monthsNov 18, 2024 18:36:15 ago (+1/-0)
Will it show positive cash flow after purchase and renovations? Do you have tenants lined up or at least in discussions ? How long will it sit vacant (estimate)? Doesn't matter what an appraisal or the market says it's worth it doesn't throw off a profit.
Are you financing it or buying it outright? You probably already have an idea as to what to expect the DSCR to be. If you're financing with a commercial lender, note that the appraisal you order most likely won't be acceptable to them; they'll have their own appraisal ordered (also paid for by you).
If you put enough down up front, is seller financing an option the parties to the transaction would be open to?
If you're financing with a commercial lender, note that the appraisal you order most likely won't be acceptable to them; they'll have their own appraisal ordered (also paid for by you).
Very valid.
is seller financing an option the parties to the transaction would be open to?
He seems to be stuck at $1.2 million for seller financing. I'm trying to see what I can do to bypass the seller since his price is too damn high.
Well, either he'll budge or hold on to the property. Obviously you're not going under contract until a price is agreed upon... but you could certainly include an appraisal contingency. If it doesn't appraise out, no hard feelings. Do you have a worthwhile settlement agent?
This year I've done some homework on commercial lenders (and brokers to a lesser extent). Feel free to PM me if you'd like some resources.
you could certainly include an appraisal contingency. If it doesn't appraise out, no hard feelings
That's the route I want to go...it's weighing the option of "knowing what someone thinks it should be worth" versus appeasing someone's ego and hoping a bank says "building didn't appraise for that amount".
[ - ] BoozyB 1 point 6 monthsNov 18, 2024 20:45:04 ago (+1/-0)
If you're sure there are no surprises, what are you waiting for? That's the easy part. He will likely reject your offer or counter, and then you have some decisions to make.
If you're sure there are no surprises, what are you waiting for?
The walk-through with an inspector is Thursday. The building is one of the first in the city, so by Friday night I'll know if it's a 120 year old moneypit or not.
[ - ] Sector2 1 point 6 monthsNov 18, 2024 18:34:22 ago (+1/-0)
If you really want the building, the bigger question is what do other people in the market for a building think it's worth? To get your best deal, you have to be willing to let someone else snap it up for the asking price.
Why does the owner want to sell?
Have you asked other building owners if they'd consider making a deal? Privately, instead of through a 6% agent. You never know until you ask.
Do you have friends who would put in lower offers before yours, then you come in high?
[ - ] bobdole9 [op] 1 point 6 monthsNov 18, 2024 18:47:13 ago (+1/-0)
Why does the owner want to sell?
He bought the building with plans to install a restaurant. Blueprints of the restaurant he planned are available on the listing. He either bailed on the project due to cost or potentially due to his wife passing.
The biggest positive is that the place is a shell. All new plumbing, electrical, HVAC, drywall, flooring, ceiling is needed. He wants stupid amounts of money just because it's a good spot.
I'll see if I can talk to other owners about funding. My friends are poors, unfortunately.
[ + ] xmasskull
[ - ] xmasskull 4 points 6 monthsNov 18, 2024 18:06:18 ago (+4/-0)
You'll get a better clue of what is real value.
[ + ] bobdole9
[ - ] bobdole9 [op] 2 points 6 monthsNov 18, 2024 18:22:22 ago (+2/-0)
[ + ] ItsBacon
[ - ] ItsBacon 3 points 6 monthsNov 18, 2024 20:14:58 ago (+3/-0)
[ + ] clymer
[ - ] clymer 1 point 6 monthsNov 19, 2024 05:16:47 ago (+1/-0)
Commercial is just about to go through the floor boards.
Your intuition is screaming walk away. If you find that you are arguing with your inner self over pro's and con's of a decision like this, wait for an opportunity where you are not split in two different directions. Every time I have pulled the trigger on a decision like this, it's been regrettable
[ + ] bobdole9
[ - ] bobdole9 [op] 0 points 6 monthsNov 19, 2024 07:08:33 ago (+0/-0)
My walk-through with a building inspector is this Thursday. I've had the walk away vibes from other spots I've considered.
[ + ] ItsOk2bArian
[ - ] ItsOk2bArian 1 point 6 monthsNov 19, 2024 03:00:06 ago (+1/-0)
Like I said, I don't know shit, but maybe do your due diligence and homework before turning in those papers and getting stuck with someone else's headache. Unless you have fuck you money, then do what ever gets you off
[ + ] bobdole9
[ - ] bobdole9 [op] 0 points 6 monthsNov 19, 2024 07:13:17 ago (+0/-0)
If my understanding is correct, the seller wants a pile of money and walk away. He owns two restaurants and this was supposed to be his third...he's not necessarily skilled enough to be a landlord.
Thursday the building inspector will walk-through with me to give a better verdict.
[ + ] RMGoetbbels
[ - ] RMGoetbbels 1 point 6 monthsNov 18, 2024 19:42:00 ago (+1/-0)
OR
OMG, a fixer upper commercial building. The permits to do any of the plumbing or HVAC are going to be $1200 each if that answers your question about justifying the appraisal.
What I'm trying to say is that an appraiser can appraise it for whatever he wants/thinks and that's irrelevant to the current owner. It might be important to the bank but I don't think that's where you're going with it.
None of us know enough about the building to make an honest assessment of it. The location, purpose or condition other than it needs work.
If YOU think it's worth it, throw in an offer, they can only say no and you lose nothing.
I missed some opportunities during the Obama Recession that I really regret but I'm not worse off for not taking them.
[ + ] bobdole9
[ - ] bobdole9 [op] 1 point 6 monthsNov 18, 2024 20:32:11 ago (+1/-0)
Appreciate the genuine feedback.
[ + ] BoozyB
[ - ] BoozyB 1 point 6 monthsNov 18, 2024 18:36:15 ago (+1/-0)
Do you have tenants lined up or at least in discussions ? How long will it sit vacant (estimate)?
Doesn't matter what an appraisal or the market says it's worth it doesn't throw off a profit.
[ + ] bobdole9
[ - ] bobdole9 [op] 0 points 6 monthsNov 18, 2024 18:41:11 ago (+0/-0)
Yes, and appreciating value based on location.
Yep
Has been since 2019 until current seller purchased it (in 2021) on speculation.
[ + ] SilentByAssociation
[ - ] SilentByAssociation 1 point 6 monthsNov 18, 2024 18:55:06 ago (+1/-0)
If you put enough down up front, is seller financing an option the parties to the transaction would be open to?
[ + ] bobdole9
[ - ] bobdole9 [op] 0 points 6 monthsNov 18, 2024 20:28:01 ago (+0/-0)
Very valid.
He seems to be stuck at $1.2 million for seller financing. I'm trying to see what I can do to bypass the seller since his price is too damn high.
[ + ] SilentByAssociation
[ - ] SilentByAssociation 1 point 6 monthsNov 18, 2024 20:44:05 ago (+1/-0)
This year I've done some homework on commercial lenders (and brokers to a lesser extent). Feel free to PM me if you'd like some resources.
[ + ] bobdole9
[ - ] bobdole9 [op] 0 points 6 monthsNov 19, 2024 07:21:46 ago (+0/-0)
That's the route I want to go...it's weighing the option of "knowing what someone thinks it should be worth" versus appeasing someone's ego and hoping a bank says "building didn't appraise for that amount".
Thank you for the resource offer.
[ + ] bobdole9
[ - ] bobdole9 [op] 0 points 6 monthsNov 19, 2024 09:46:28 ago (+0/-0)
Almost an exact quote from my agent.
[ + ] SilentByAssociation
[ - ] SilentByAssociation 1 point 6 monthsNov 19, 2024 09:56:14 ago (+1/-0)
It sounds like your real estate agent knows what to expect. That's reassuring.
[ + ] BoozyB
[ - ] BoozyB 1 point 6 monthsNov 18, 2024 20:45:04 ago (+1/-0)
That's the easy part.
He will likely reject your offer or counter, and then you have some decisions to make.
[ + ] bobdole9
[ - ] bobdole9 [op] 0 points 6 monthsNov 18, 2024 20:59:30 ago (+0/-0)
The walk-through with an inspector is Thursday. The building is one of the first in the city, so by Friday night I'll know if it's a 120 year old moneypit or not.
[ + ] BoozyB
[ - ] BoozyB 1 point 6 monthsNov 18, 2024 21:48:53 ago (+1/-0)
[ + ] bobdole9
[ - ] bobdole9 [op] 0 points 6 monthsNov 19, 2024 09:46:47 ago (+0/-0)
[ + ] Sector2
[ - ] Sector2 1 point 6 monthsNov 18, 2024 18:34:22 ago (+1/-0)
Why does the owner want to sell?
Have you asked other building owners if they'd consider making a deal? Privately, instead of through a 6% agent. You never know until you ask.
Do you have friends who would put in lower offers before yours, then you come in high?
[ + ] bobdole9
[ - ] bobdole9 [op] 1 point 6 monthsNov 18, 2024 18:47:13 ago (+1/-0)
He bought the building with plans to install a restaurant. Blueprints of the restaurant he planned are available on the listing. He either bailed on the project due to cost or potentially due to his wife passing.
The biggest positive is that the place is a shell. All new plumbing, electrical, HVAC, drywall, flooring, ceiling is needed. He wants stupid amounts of money just because it's a good spot.
I'll see if I can talk to other owners about funding. My friends are poors, unfortunately.
[ + ] Trope
[ - ] Trope 1 point 6 monthsNov 18, 2024 18:25:07 ago (+1/-0)
[ + ] bobdole9
[ - ] bobdole9 [op] 0 points 6 monthsNov 19, 2024 09:47:53 ago (+0/-0)