Posted by Joe on April 16, 2003 at 21:44:29:
Eddie,
Thank you for your response. In the end she agreed to take $10,000 off the down…never any remorse…but now we think the numbers do make sense.
Any thoughts on whether you think they make sense?
Thanks,
Joe
Maybe not so spoiled after all. - Posted by Joe
Posted by Joe on April 06, 2003 at 23:17:39:
Ray,
I know it’s been a while, and I don’t want you to think I forgot who helped me get this far on our first deal, so here’s the late check in…should probably have been sooner for my own sake.
Last time you wrote back to me you told me not to get spoiled because many deals like this would have already fallen apart. I’m starting to see some of the reason why maybe this one didn’t.
During our due diligence for this 5 suite office complex that we have under contract for $270,000 (80% owner financed, 25 yrs. 6% int., $26,039 NOI), we found that 4 of the 6 AC units are 1978 models on their last leg($4,000 a piece) and some of the tenants were actually non-paying termites.
To make a long story short, our broker(after filed extensions to close April 11th) incorporated addenda on the Buyer Inspection And Seller’s Response form requesting that the Seller take care of the termites and take $20,000 off the down payment for AC’s(plus $5,000 of other needed repairs on bldg. insp. report), and $19,000 of mis-represented income due to vacancies.
If the seller doesn’t tell us to take a hike (this $250,000 is what she paid for it years ago), we are justifying 3 to 6 months of negative cash flow with the intrinsic value of the building and the upside that the future tenants will be under OUR terms and will make up for any loss IF we end up paying what the building’s really worth.
These ideas are shared by several people including my brother/partner and our broker who says he wouldn’t let us get hurt and wants our future business(and disagrees with us as to the amount we’re asking for). I hope I’m not burying my head in the sand just because I’m already into this deal for $2,500 gone for good(ALTA Survey,termit insp, Bldg.insp etc.).
As always, any input is greatly appreciated,
Joe
Re: Maybe not so spoiled after all. - Posted by dave_in_Minnesota
Posted by dave_in_Minnesota on April 10, 2003 at 06:33:46:
Joe,
Make sure you know the market for buildings of this type. In my area, you cannot give office space away. 20%+ vacancy rates. Make sure the building’s price reflects the vacancies, you may be sitting on them for quite some time. In addition, if you sign up a new tennant you should get the equity based on your doing the work.
dave.
Re: Maybe not so spoiled after all. - Posted by Random
Posted by Random on April 08, 2003 at 08:32:02:
Joe:
PMFBI, but NEVER chase money down a hole with good money! The $2500 should NOT be in the equation at this point! Fahgetaboutit!
Re: Maybe not so spoiled after all. - Posted by Joe
Posted by Joe on April 16, 2003 at 22:01:53:
Dave,
Thank you very much for responding. After reading your response I found more ways to research the office market here and am learning a lot.
Although kind of late in the game, we do feel the bldgs price reflects the vacancies, and are willing to sit on them for the intrinsic value of the building.
I’m sorry…I don’t think I understood the full gist of your last sentence though…could you elaborate when you get time?
Thank you,
Joe
Re: Maybe not so spoiled after all. - Posted by Joe
Posted by Joe on April 08, 2003 at 18:06:00:
Random,
Thank you for your response. I appreciate as many as I can get from everyone.
I’m not sure I’m getting your full meaning though. I realize I shouldn’t let the $2,500 sway my decision…this is my point…and I hope I’m not. But are you saying that this is not a good deal at $250,000($34,000 down) and that I should forget about the deal at this price?
Thanks,
Joe
Re: Maybe not so spoiled after all. - Posted by EddieMI
Posted by EddieMI on April 10, 2003 at 19:06:30:
She probably won’t agree to cut her downpayment by almost 40%. With commissions and closing costs, she would be lucky to clear 20,000.
She might do it, but thats a tough thing to accept in the 11th hour. Buyers remorse is pretty common, but if the numbers make sense- just do the deal.