The Terry Hale Show Episode 14

Strategy of a New Deal Closed

TRANSCRIPTION

Hey, this is Terry Hale.
I wanted to share some details of a project
that I just closed with a client of mine.
The client has been with me for two and a half months now.
And he located a project in Kissimmee, Florida.
It’s a self-storage facility,
a little over 100 units, some parking spaces.
But the deal…it was kind of out of the norm.
It was 100% full already.
And I typically look for value-add from vacancy.
So vacancy is, the quickest way to take a property
and realize upside that raising rents,
adding profit centers, lowering taxes by protesting them,
and also lowering expenses – any vendor expenses.
But with all that said… this project,
the reason why it was so great,
is we saw it advertised at 1.2 million.
And it was an inflated value
it sat on the market for a while eventually fell out.
And my client noted something
that I just previously taught a couple of weeks
before he found the project.
And this is what I taught. This is what’s so cool.
What happened was they have a mortgage on the property,
then the existing mortgage,
they were servicing debt at a high-interest rate.
And so they factored in their actual
mortgage expense as part of an itemized expense.
That’s not how it works,
you do not calculate your mortgage expense
as part of your actual expense on a property.
And so they did that showing less net operating income.
After we kick that out. As it turns out,
the property is worth a lot more,
I’m talking between that and replacing
the management with the swing gate,
it was definitely a value add of about $70,000 at closing.
So that doesn’t seem like a lot of money,
just $70,000 in income.
But if you were to use a simple calculation,
which is a 10 cap rate,
just taking a 10 cap formula on 70,000,
that will come out to $700,000 in true value.
without adding any additional expense,
we instantly got a value bump, an instant value Bob of 70 grand,
which is a phenomenal opportunity to buy the property.
Plus we also use some negotiation secrets,
which I taught my client
to be able to acquire this property,
we closed it at $500,000.
All cash, quick close after due diligence.
And now we’re sitting on a property
we could easily put back on the market
and make ourselves four to $500,000.
Like that. If you liked this segment,
and understanding some techniques and strategies
of locating properties that are sitting
there all around us that these folks that are selling them,
they just don’t know how to sell they don’t know how to market.
This was just one of those scenarios.
And it’s quite common.
I can show you more go ahead
and click the link in the description of this video
or go to terryhale.com
and watch my free workshop.
Check it out and I look forward
to engaging with you real soon.
Take care

KNOWLEDGE IS POWER

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