Posted by Diana Watson on November 15, 2004 at 20:11:50:
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Dwight, Thanks for the numbers. Definetly a little sand bagging. I question these figures due to sharp decline from previous years: Bank Charges, Sewage, Maintenance, Advertising, Licenses, and Legal. Also, what is the Consultants Fees - Sewage for $6,100?? and the Consulting Fees - PM for $6480?? Would you be doing these jobs, and making that money? Also, from your previous post, you said the income was $92,935. However, I calculate 42 lots times $160 equals $80,640. Big difference. Also, I’m not excluding any delinquent lots. I put all these numbers and what I thought certain numbers should be and didn’t include any profit for you (assumed you would be the consultants) and I came up with between $280k - $305k. I didn’t include anything for the extra land, that is free. Lastly, can any of the expenses be cut in the future. Is the water individually metered?? If you what to see my spreadsheet, just respond to this message.
All I see is expenses, is there no income? Is this a positive or negative cash flow property? What is the lot rent? Any other rent? Any other income? Got to have both sides to develope an opinion.
Dave Fl.
Yes, I would love to see your spreadsheet. I decided not to go see the property yesterday because I thought that it would be a waste of my time. Based on the statements that were sent to me, which you have commented on yourself, I do not believe that the seller can justify his asking price. So, I told the agent that I would write up a few contracts for the seller to look over and fax them to him. He called me back 20 min. later saying that the seller has his hands tied, as is, and he would look at any offer.
I do not feel comfortable with the amount of expenses I would be paying so I plan on offering $330k with owner taking back 20%. Or $295k all cash. Both are subject to financing, approval of partner, approval of attorney, due diligence. Accepting the fact that the property is worth about $320K using a cap rate of 12%, am I correct in thinking that when I go for financing that the land will be included in the appraisal? The land should go for about $4,000/acre, which adds another $120K to the value. That’s an appraised value of about $440K which will allow me to take a 75% loan and get some cash back. On top of that, when the agent called me back he said that he is more than willing to work with me on selling parcels of the land to people who have been calling him. He said this without me even asking.
I figure that I can at least sell some of the land and then sell the property after a few fix ups and make a good sum of money in the process while allowing the seller to get some cash without losing his asset through the court. Win/win. I don’t believe that he wants out of the property; so, it’s possible he will want to buy it back from me will an sell.