Pro Team Commercial’s Post

Transcript

You're, you're in commercial pretty much exclusively -1 short term rental. I believe the deal that we're talking about today is a commercial building. What kind of building are we talking about today? I gotta set the scene. This is actually a light industrial property that I that I still own. It's, it's in southwest Michigan. So think of the, the highway that connects Detroit to Chicago. If you drive that about halfway in between that there's, there's a community that's a little bit rural, but it has a really big industrial park. So it's, it's got a, a robust kind of industrial community in in addition to kind of this rural Agri AG community and. The way that we came to to see this property was about five or six years ago, Michigan passed some laws to legalize both recreational. Well, first it was actually medicinal use, but then it was recreational cannabis. So if you were in the real estate industry at that time, particularly commercial and industrial, this was a big deal, right? It was, it was kind of a little bit like the the gold rush, if you know what I mean. Communities, the way the laws were set up, were each Township, village and city. Got to decide whether or not they opted in, which meant that they would, you know, legalize or approve the use within their community. So my business partner and I were, you know, tracking these opportunities. And we had a friend who was a lobbyist and he was actually working with a lot of communities to adopt their ordinances. So he was kind of our Intel source and he would tell us, well, hey, you know, such and such community is looking to establish whatever the license was if it was cultivation. Or provisioning within this zoning, right so so we had a tip before it was adopted. So we were we were hunting for for big deals, you know stuff that was big time value ad and Long story short the. The property that ended up purchasing was not the one that I was there to look at. Tell me more. Yeah, my SO, my business partner. He sent me an e-mail and he said, hey, I think we got a lead here on one that might be in the Green Zone is is what we said. So I was like, OK, I was actually going to be in this neighbourhood is part of a family vacation. So we are going to visit my in laws and they've got a place in this area. So I was like, well, great, I'll just slide over there. You know, it's just half hour away or whatever over the weekend and check it out. So we set up an appointment with the listing broker. And met him out there and, and the building that we were looking at was. It was a 38,000 square foot industrial building and they used to do manufacturing in it, But but the thing was a mass they, it looked like it had been abandoned for about 15 years. And he was just using it for like boat storage, cold storage, you know, like for, for people that lived in the community to, to keep their, their stuff there. They're junk there, you know, over the winter pretty much. But the loop, the roof was leaky there. There was mold everywhere. You know, it was just, it was going to be a nightmare, but the price was good. So we wanted to check it out. So it was a 38,000 square foot industrial building and there that listed for 565. And it had the right zoning. So, you know, this was a big time lead. If this happened, this was something that we could make some serious cash on. And we had done a couple of these deals. So, you know, we we knew how to play the game. So I was walking through with the listing agent. I started chatting him up and he was just one of those guys that couldn't shut up, you know what I mean? He was just talk, talk, talk, talk, talk, talk, talk. And, umm. We gotta about done with the showing and and I asked him. I said are there any other buildings that the seller owns? In this area he said ohh yeah the guys name was Ken. He's like Ken owns the building down there, the building over there, the building over there he only like 6 buildings and they were all in the Green Zone. It in this guys, he's older, I think he was 80 something years old and I think he was just starting to kind of like divest his real estate portfolio, you know, but he's still operated a few businesses out of these buildings. So immediately I was interested to hear what else there was because this one was not good. The the the condition was terrible. And he said, yeah, there's one down the street, the white building and it's vacant. He doesn't use it for anything. He might be interested in selling that one instead of OK, can I see it? See it that No, it's, it's not it's not for sale. It's not listed. You can't see it. So OK, so that the showing was over and I got back to my in laws place and I called Larry. Who's my business partner now? But he was acting as my agent in this capacity. I said I found two buildings. And he said, too. I said, yeah, two. There's the one we looked at, and then there's one down the street. You know, the addresses this. Look it up. Tell me what it's worth. We're going to make an offer on both. Go big. Today we wrote two offers, one for the building we walked through and one for the building we had never seen but just drove past. The one we had never seen was a little bit smaller and it was in better condition. It's a 9800 square foot light industrial building. So it's just a kit building, a pre engineered building, a perfect box with a little bit of a little bit of office coming off the side of it and two overhead doors. Umm, but I looked in the window and it looked a lot better condition wise. So we ended up right into offers and he accepted both. Wow, that's awesome. Yeah yeah, so. That was a big win. We were excited about that. But then then the diligence started, right? We needed to confirm with the municipality. As it turns out, they actually had a guy in their planning department that had all the addresses of all the properties that were eligible for their ordinance and all that. And as it turns out, the original building that I looked at was like 5 feet too close to a school, so it didn't qualify even though it had the right zoning. They had, you know, like radiuses set up around so where you could only be 500 feet within a school or something like that. So we actually cancelled the purchase agreement on the one that was listed and for sale and focused on the one that was off market. So when it comes to actually financing something like this, obviously you you didn't go through with the first one, the one that was in, you know, worse shape or worse condition. How did you go about financing the purchase on the 9800 square foot building? Yeah, good question. So that was the beauty of of the fine that we had. We gotta got it under contract for 280. And at $9600 a square foot, we are less than $30 a square foot. So we, my business partner and I actually just went 5050 cash on this one. So umm. Yeah, that, that was pretty straightforward. We it was just set a time where we had happened to be, you know, saving some money from some of our other real estate income and had cash on hand. So we we started just kind of pointing the arrow towards closing and and it got a little crazy from there because. The guy that was selling it was old, stubborn, and in really poor health. Recipe for disaster. Two weeks before closing. We get a call from the listing agent and he said that Ken was going into open heart surgery. And we're like, no, no, no, no, no. Let's let's move up the closing. We need to close this deal because I don't know what's going to happen to Ken during open heart surgery. And we do not want to lose this deal because this thing is worth at least 2X, if not 3X if we can get it closed. Absolutely. So did you move up closing? He wouldn't. So we were rolling the dice. And. He made it through. He made it through. And about two weeks later we set up closing, we, we drove, you know, to two hours properties, two hours from our house. Sign the papers and met his wife and you know, it's just old fashioned closing with a couple in their 80s and everybody was smiles and handshakes and we we walked out of that with the property that we we knew we were going to be able to make some money on.