You know the old expression, “kill two birds with one stone?” Well, my partner and I just did that and it was pretty cool. Figuratively speaking, of course.
Up until this point in my investing career, I had done zero flips and owned zero commercial properties. All of my investing had been single-family homes, duplexes, and triplexes. They continue to serve me well, but I really wanted to “make it” and own a commercial building. So, that is exactly what we just did.
How It Started
It all started with a call from a wholesaler we had looked at properties with before but never pulled the trigger. Her deals were good, but they were not good enough for us to move on. During our phone call, she began to explain that she had a four-unit building in a decent area of the town I invest in. Anything for sale in this particular town, I perk right up. She had officially caught my interest.
The four-unit building she was wholesaling was being marketed for $220,000, or $55,000 a unit. A unit for $55,000 in this town is more than likely going to need repairs and may have some challenging tenants.
However, as she began to explain further, she described something quite different. She was saying it needed few repairs and the rents were as follows:
Unit 1: $900
Unit 2: $900
Unit 3: $830
Unit 4: $1,000
They were slightly under market but not bad. I got the feeling that this could be a really good deal.
Since I also live in this town, I took a quick drive over. The place was beautiful, at least from the outside. The siding was in great shape and the roof appeared to be the same. Now, I did not know what the inside looked like at this point, but I was willing to take a gamble on it.
I called my partner, Michael, and explained the situation. He also invests in this same town and has great financial connections. He said he felt like it would be no issue to find funding if it was as great as I was saying that it was.
I called the wholesaler back and said, “We will take it. Send the contract over.” We signed the contract conditional on seeing the inside.
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