Fun In The Sun Part 11
1:1 Buying Tour – San Diego Day 11
11 down, 3 to go!
Once again, Bob, Scott and I started the day off having breakfast in the hotel. It’s a way for us to get grounded and prepare for the day. There is no doubt when we are together. The entire first floor can hear us. We enjoy each other and our work!
Students, students, students! We have 7 students with us! Jamy Vanderwoude, Jackee and Ron Benson, Ilene Durbin and Brent Tyler, Nancy Moore and Majorie Durkee.
We split up into groups. My group consisted of Jamy, Nancy and Marjorie. Our primary goal was to check out the 24 Unit apartment building in National City. Scott provided us with a couple additional properties to put eyes on since we would be in the neighborhood.
My real estate agent had attempted contact with the sellers representative of the 24 unit apartment. We had no luck, and decided to pull into the building and see what we could find out. It looked good at first blush. A gentleman saw me taking photos and approached me. Turns out he is the son of the owner, and promptly introduced me. How cool is this! I received a personal tour of the building, including 2 vacant 1 bedroom units and the daughters 2 bedroom apartment that is also used as the managers office. The owner has made numerous repairs, and was very forthcoming in all the details. We discovered his motivation was to retire to Ensenada and build a home. This tells us he may not be willing to move off his down payment requirement, and if we met this, he could be willing to negotiate other points. Always know your sellers motivation!
We noted several opportunities to increase income. The first was the additional parking lot and the ability to add either storage units or carports. The second was the laundry room and possible expansion to include more retail items. Another was the sellers daughters apartment being used as the on-site managers office. It would actually be more lucrative to rent the 2 bedroom apartment and hire off-site management.
I received a phone call from the sellers lawyer later that day, upset that I spoke directly with his client. There’s no law that says you can’t drive by an apartment building, and I did not engage with the owner. They approached me! Don’t let people intimidate you or get in the way of a deal!
We liked the 24 unit apartment building very much. Their list price was a 5.13% cap with owner financing for 10 years, interest only at 4.25%. We reviewed the numbers, making the appropriate adjustments for income and operating expenses. We ultimately decided to offer $250k less than the list price, which put us at 5.5% cap. My real estate agent Sonya began working on the contract.
One group of students went up the coast towards Carlsbad to check out some properties. They managed to find some prospects, and learned an important lesson. If you are fortunate enough to get face time in front of a seller, you need to get as much information as possible. They came back, quite proud, believing they had some great deals for us. Turns out they were missing a few key elements, like the ARV and what precisely the desperate seller of a high end home would be willing to do – owner financing, carry back a 2nd, etc. Great learning opportunity for the students! Got to give them credit for putting themselves out there. Next time I have no doubt they’ll gather all the pertinent information.
I filmed most of this discussion with the students. One of the students missed most of the discussion, so I queued the 40 minutes or so video up and all the students proceeded to sit and watch themselves! Scott went to the next room and made 31 calls during this time to homeowners, hard money and private money lenders. I reviewed and signed 8 contractual documents from various real estate agents we are working with. When the video ended, Bob asked the students what they had accomplished during the 40 minutes. They were stunned to realize what we completed vs. what they completed. Everyone needs a break now and then, just make sure your actions are in line with your goals. Another great lesson!
We queued up additional offers from research the last couple of days and sent our list to the real estate agents so they could work on the offers. Even though the 24 unit apartment and the 3 oceanfront condos may be great deals, we can’t stop our offer generation pipeline. It’s important to keep that momentum going.
Bob, Scott and I joined the students back at our favorite taco dive in San Diego. We definitely took over the place. Good food and company, great way to end the day!
Day 11 Wrap
24 Unit Apartment Bldg Tour
Real Estate Education Material
- Real Estate Investor Training, Real Estate Coach - Real Estate Profit Coach - RealEstateProfitCoach.
Real Estate Investor Training and Real Estate Investor Coaching providing step-by-step, action steps to help you find more deals, get them funded and get paid faster.
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