1.6 million dollar flip - Posted by Greg Schultz

import · March 28, 2002, 12:24pm

Posted by ScottE on March 29, 2002 at 24:17:34:

Hey Steph,
Can you refresh my memory about getting around the seasoning by using a trust? I remember it being mentioned before, but don’t remember the details.

Thanks!
Scott

import · March 28, 2002, 12:24pm

1.6 million dollar flip - Posted by Greg Schultz

Posted by Greg Schultz on March 28, 2002 at 13:24:04:

My commercial realtor buddy showed me a property he just got last night. 5 Seven Eleven stores, the real estate only. Still has anywhere from 2 - 8 years left on the leases, with an automatic 2 five year renewals.

I have an investor that is looking for just such an investment.

My question is, will there be a seasoning issue if I write up a contract for 70K less than the asking price and write up another contract for the full price to sell to my investor?

Can I ask the seller to deed it directly to my new buyer?

Will a double close be too much tax exposure?

I have done a couple of deals with these investors for assignment fees and it seems they have trouble with me making more than 4 - 5K.

With this income stream I am expecting to make a lot more than that.

Any advice from anyone will be greatly appreciated.

I am getting together with the Realtor in the morning to see what he thinks and try to tie it up. With all of the numbers working, this property will not last a week.

I will keep you all posted as to what happens.

Time is of the essence.

Thank you
Greg

PS… It should be said that without the investors I can not close.

PSS…I posted on the commercial site also looking for advise.

import · March 29, 2002, 10:04am

Tell me this then - Posted by Greg Schultz

Posted by Greg Schultz on March 29, 2002 at 11:04:24:

Is it a deal?

5 fully rented to a national chain store tenant, real estate only.

All are situated on high traffic, prime locations in their communities.

15 year triple net leases are ending in 04 with two 5 year options in lease, with a 15% rental increase provided.

Income 162,825 p/year
Price 1,670,000

Is this a good investment?

Thxs
Greg

import · March 28, 2002, 7:51pm

Re: 1.6 million dollar flip - Posted by Greg Schultz

Posted by Greg Schultz on March 28, 2002 at 20:51:47:

Realtor let me put it under contract for 5 days.

Income is $162,825 or about 10% of purchase price, on a triple net lease. One investor says that, “that is only a 10% return”.

I told him that does not take into account tax benefits of ownership, or the 15% rent increase built into the existing leases. So it is not a good measure.

How do you figure the value, or cap rate of a given income stream?

Thanks DB & Steph
Greg

import · March 28, 2002, 6:11pm

Re: 1.6 million dollar flip - Posted by Steph in Tex

Posted by Steph in Tex on March 28, 2002 at 19:11:37:

I’d just contract with a feasiblity period (long enough for you to sell it and allow for a feasibility period for your buyer)
and
include a remarket clause (which I always note that I will be representing myself as principle and have equitable interest in the prop).

Should be suffient protection to allow you to contract with the seller and then again with your investor with little risk.

You can get around the seasoning issue by utilizing a trust, just state that “buyer has the right to take title in trust if desired” in your contract.

Sounds like a sweet deal. Good luck.

Steph in Tex

import · March 28, 2002, 12:45pm

Re: 1.6 million dollar flip - Posted by DB

Posted by DB on March 28, 2002 at 13:45:30:

There are lots of brokers and CPA’s that can probably answer your questions in great detail online. You might want to check out http://www.loopnet.com or http://www.ccim.com