The Next Level Upwards
By this time you have read a lot of postings. You have bought a few books, some of which are applicable to modern times and some are purely historical in context and some, yes some should have been printed in Early Medieval English with footnotes in Latin.
I make the assumption that you have gone out and rung a few doorbells, made a few contacts and perhaps a purchase or two. A lease option, or layoff deal which grinds a small return and the hope of a high payoff some time in the future if, big if, the market holds.
You may have attended a foreclosure sale and watched the bidding as they approach the top of the high market prices generated by todays lack of sufficient starts of new house construction in the lower price levels.
You are to coin a phrase "Checked Out." The time has come to move on to the next level. An area of increased profit and decreased activity.
Enough of the single little house or duplex with the whining tenants and the phone calls to fix a dripy faucet or quell the hords of cockroaches responding to the smell of grease and the promise of warmth in electric outlets.
Enough of hearing that the rents cannot be paid as the wage owner is in jail for beating up his ex wife or stopped in a bar on the way home and in a moment of exhuberance blew the paycheck.
Consider this: You are going down the street and you notice to your shock and dismay that the gas station on the corner has just gone out of business. Also the little barber shop next door is closed. Next to which is a vacant lot where there used to be a flower shop that burnt down a year or so ago.
You are looking at an assemblage. You are going to option those properties one by one and put them all together and then either sell or participate in the erection of a Minnie Mall, a two story or three story mixed use commercial building, whatever.
You start with the Gas station, you check to see who is the owner, is there a lease, is the lease assignable, should you offer to buy, or should you merely take over an old lease. You offer to buy and after the bargaining back and forth you convert into an option for six months. If possible you reduce this to a nice document that can be notarized and recorded. You open an escrow and you put the first property in.
Now on to the next. I would skip the next property in line and go for the end one. They are the owners of a vacant lot which does not produce income. You negotiate with them, turn the deal into an option and then throw that into the same escrow of sale.
Having surrounded the barber shop you start once again to negotiate on that. Remember when all the properties are put together they are usualy worth at least 25% more and that is a bottom figure.
Of course this is a going business and part of your pitch may be that you have a much better location for the barber shop indeed you might even offer to pay a few months rent in the new selected shop. Well why not. If you are licensed get a commission on that lease. Or if the timing is right you might offer to build a new barber shop with, are you ready, living quarters above. Oh my god barbers heaven. Of course if you are really with it you negotiate and slap on a beauty shop. You think they do not go together? They do, Oh god what I have gone thru having women cut what is left of my hair. I overpay for a good barber anyday. Besides all barbers are great intelligence operators where else do you hear all the neighborhood goodies which can be converted into future Negotiations.
Ok, ok, that is an assemblage. Very profitable to the person who goes out and hustles and puts the dirt together. You get to participate, or you can if you sing loud enough stay as prime mover and run the show. Very profitable and creative and lots of fun.
Syndication: Here comes another fun activity which does not require a knock on the door. I am sure all of you have a Doctor that you see on occasion, or an Oculist or a Cleaner. Shall I go on. Form them into a group. Tell them it is time they started to spread their wealth a little and the first thing is to invest in the furtherence of their own community. So you start with their capital and most important their credit and banking connections and you buy property.
If you are in a growing area and have a busy major street, why not option a hunk of land on a nice swing corner and then contact the Oil Company of your choice and pitch them into giving you a nice long term lease on the land. Your investors will love you.
Or you might canvas the area and see what new kinds of business are necessary to expand your town. You select the properties and once again option or you might indeed participate in the erection of the structure that will house the new doctor, or clinic. Whatever.
I am sure you see what I am saying. This is the next level and yes having funned around with this for a few years, you will then go onto another higher space.. For now concentrate on this dimension.You need the experience.
OK Creative Investors, post to this article, come up with concepts and by posting you will crystalize your thinking and perhaps stir yourself and other viewers to action.
This is written as a "sparker" come on now outdo me go crazy. Original ideas. Lets go thru this level and up above there is another. Here is where you learn to play Trumps game or Snyder if you are in California. This is the first entrance level. Once you master this one, I will show you the next one. Oops sorry the assembled Gurus, Teachers, Advanced Ones they will then take you to an even higher level.
Upwards and Onwards. Per Ardua. or at least an attractive bit player.
Lucius
Sounds good. Before you make your mind up and start negotiations on a Buy or Lease or Lease avec Option, I would query a few of the people walking the streets or in business near by. You ask what would you like to see in the abandoned building. The Business people will give you what they would like to help their business increase foot traffice etc. etc. The guys just walking around will give you a facility that they might use.
Good thinking, keep working on it. The area sounds about right. Smaller towns are a bit dull for the High School crowd. Think of something that will really draw them. I think you are considering them as your basic target users.
Cheers Lucius
I ask you then if you are ready to be an owner of a small business? Will the time it takes you to get this up and running steal from your dream as a real estate tycoon? Small businesses are very time consuming. Perhaps optioning it and advertising a lease to want-to-be entrepreneurs in the area, holding it for the long-term appreciation of when this town grows?
There is an empty supermarket building in a growing town near us. They were a local company, and went out of business when Albertsons and Fred Meyer built near them. The town ihas a rural feel, but is growing and has made lots of road improvements. But there are only 2 fast food places. Would a building like the old grocery be good as a family fun center (nothing like that in town) for laser tag, indoor go-carts, etc.? It is for rent. Would it be better to buy it, find a fast food company to build on the lot near it? Do you think it could work? How would you structure a deal?
per ardua ... ad astra !
Thanks Lucius ,
printed and posted..on my "short term / mid term " goal.
David (mcldavid)
Ok Lucius, here goes. BUT this is not the next step up for me, I’m just a “newbie” . Here is a post I made about a week ago
… Basically I’ve scared myself _____less BUT I haven’t given up. I “think” I’ve decided to go the easy route and try and put an option to purchase contract with very long due diligence time frames – and try and flip to a luxury home builder. GFOUS was awesome in sending me a piece of a contract that looks great, and I’m trying to “piece” it into a regular options contract, by putting in the regular stuff up front, auth to assign, etc.. But I’m afraid I’ll make a mistake in the contract and won’t have a legal way out.
DO I do my best on the contract and then get an attorney to look at it and finalize? Do I come up with the funds for the due diligence work and pray that I get it back one way or another (I have no funds for this myself). I keep thinking that if I go slowly, and methodically, that I might just make a small tidy profit, say $10,000 - $20,000 to split with my “investor” of the due diligence and attorney money, to give me enough start money to do regular old newbie deals.
Okay, now, BLAST me with the facts, opinions, comments and suggestions. (I LOVE this board) Kathleen.
Nice 'sparker" Lucius and per your suggestion I have few comments and as many question bellow.
First, you sad:
"You offer to buy and after the bargaining back and forth you convert into an option for six months."
Can you please elaborate some more on:
1) The type/kind of option sparked young investors would use in tying up the closed down gas station property. The elaborate response should consist explanation on what could possibly be the reason for owner, anxious to rent again, to allow you to have such long lasting escape hatch to remain open?
2) How can you put two unrelated properties owned by two separate owners in one escrow?
3) Can this level of investment be skipped on the way to the next or this step in your opinion has to be stepped on 100%. My guess is that this step is necessary if you otherwise do not have investors or credit available to tackle the larger deals. If anything else, please ad on.
Nice 'sparker" Lucius and per your suggestion I have few comments and as many question bellow.
First, you sad:
"You offer to buy and after the bargaining back and forth you convert into an option for six months."
Can you please elaborate some more on:
1) The type/kind of option sparked young investors would use in tying up the closed down gas station property. The elaborate response should consist explanation on what could possibly be the reason for owner, anxious to rent again, to allow you to have such long lasting escape hatch to remain open?
2) How can you put two unrelated properties owned by two separate owners in one escrow?
3) Can this level of investment be skipped on the way to the next or this step in your opinion has to be stepped on 100%. My guess is that this step is necessary if you otherwise do not have investors or credit available to tackle the larger deals. If anything else, please ad on.