Jumping in the deep end? - Posted by Racer X

Posted by Bess Dresser on November 18, 2004 at 22:46:12:

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Jumping in the deep end? - Posted by Racer X

Posted by Racer X on May 26, 2004 at 24:33:23:

Hi,
I found an office high rise for sale at 9.8M, probably worth twice that, the last renovations were 18M. It’s in the center of a major metro area and has lots of potential. I only have 2 problems:

  1. If I can do this where would I start?
  2. This would be my first RE deal, where do I start?

Re: Jumping in the deep end? - Posted by John Bruno

Posted by John Bruno on May 26, 2004 at 23:25:51:

Take a pass.

If this is your first deal and it looks too good to be true, it likely is too good to be true!

Why do you have to go after something so big right out of the box? Think of the exposure of your assets in something you know nothing about!

Believe me…based on my experiences…when carrots are dangled as this one is, has to be something attached to it!

Re: Jumping in the deep end? - Posted by wes

Posted by wes on May 26, 2004 at 07:18:33:

It is not my aim to be negative and I like to see people succeed. But, unless you find an experienced person or group to team up with/partner, I would advise you not choose such an expensive property as your 1st RE deal.

Just the few comments you made about this property, leads me to believe there is a good chance for an inexperienced investor to make some “fatal” mistakes in analyzing this situation (worth about double the asking price and about double the last renovation amount???).

An obvious question I have that might be easily explained, or might make an important point. How did you happen to find such a deal, when if it is such a good deal, numerous “pros” in this field would have already snapped it up?

Further, Unless you have a very large net worth, or bring in a/some “significant” partners, I cannot see any lender ever appoving a loan of such size to someone with no RE experience.

Good Luck!

Re: Jumping in the deep end? - Posted by Racer X

Posted by Racer X on May 26, 2004 at 20:21:35:

Thanks for the response, the assesed value was twice the asking price, was just noting the renovation, but alas it is gone now. It was open for 3 days, now it’s gone.

Re: Opportunity? - Posted by ray@lcorn

Posted by ray@lcorn on May 27, 2004 at 17:24:06:

“Opportunity, without the capacity to capture it, is an illusion.”

That’s a favorite saying of mine that was in my college economics textbook. I’ve spent a lifetime increasing my capacity in both knowledge and capital in order to be able to take down bigger and bigger deals. As a first deal that one is probably not a good place to start unless the $10mm is a small portion of your investment dollars and you have a capable team in place to do whatever needs to be done.

That being said, I still love to read about deals that are way out of my range just to look for hints of deal points that I may be able to use in deals that are in my range. From that perspective, every deal I look at is an educational opportunity regardless of my financial capacity at the time. That’s how we all learn… so keep looking, ask lots of questions, and increase your capacity with each deal you look at.

ray

Re: Opportunity? - Posted by Stephen Cunningham

Posted by Stephen Cunningham on November 22, 2004 at 06:38:55:

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