investing in property with nothing

[oldschool]

just for fun.....kinda


there is a piece of property in a local ski resort that is listed at 4.5 million dollars. It is a residential/commercial building selling for the assessed value. The mortgage on the building at 7% 25 years is about $33000/month. The building brings in 55000/month. How would one go about getting money for the property without owning their own home?

Why would the people be selling it if it is such a good ROI

 

[Leareth]

Hmm when I went looking for property to buy
I used my gemstones as part of the assesment of what I am worth.
with the gemstones included I am able to get a $350,000 loan, without under $100,000. some places wanted a co-signer to the loan amount.

You have to prove that you can make the downpayment and first months payment before they let you even look at it.

As to why someone would sell a property like that.
the appraised value may change suddenly 0while the buildings bring in money, you also have to spend money on managment, maintainance etc.
might be losing money.

 

[foidulus]

Probably a lot of hidden fees they don't want to tell you about, taxes, maintenance etc.

They could also be selling it because they took out a fancy loan and now are having trouble paying it back(maybe the took out a loan for more than the property was worth and it has since fallen in value.

 

[CalBoy]

I'm willing to bet that even though it seems like the property makes 20k/month, there are many costs you aren't aware of. For example, if the property is assessed at $4.5 million, the property tax, even if it is only 1% (pretty low), then that's a good $45,000 per year. That comes to almost $2,000/month. Add in insurance (I don't know commercial rates, but I'm guessing it's at least another $1,000 per month), and that "profit" margin begins to loose its appeal. You also have to factor in security, maintenance, utilities, etc.

If you consider the fact that you'd need $450k at the least for a down payment, you see that there are better investments out there. Heck, a basic 5% CD will earn you decent money. If you invest in stocks and such, you could make a pretty good return without having to bother with all the trouble of owning land.

 

[oldschool]

I'm willing to bet that even though it seems like the property makes 20k/month, there are many costs you aren't aware of. For example, if the property is assessed at $4.5 million, the property tax, even if it is only 1% (pretty low), then that's a good $45,000 per year. That comes to almost $2,000/month. Add in insurance (I don't know commercial rates, but I'm guessing it's at least another $1,000 per month), and that "profit" margin begins to loose its appeal. You also have to factor in security, maintenance, utilities, etc.

If you consider the fact that you'd need $450k at the least for a down payment, you see that there are better investments out there. Heck, a basic 5% CD will earn you decent money. If you invest in stocks and such, you could make a pretty good return without having to bother with all the trouble of owning land.

yeah thats what i thought, but the datasheet on the building had a full breakdown of the tenants rent, taxes, utilities, expenses...and anything else i could think of. still makes no sense to me. unless they need the money for something else.

 

[CalBoy]

yeah thats what i thought, but the datasheet on the building had a full breakdown of the tenants rent, taxes, utilities, expenses...and anything else i could think of. still makes no sense to me. unless they need the money for something else.

Since I'm not a realtor, or an investor, I really can't provide you with solid information about what might be missing from their data sheet. All I can do is repeat the wise words of many others:

If it sounds to good to be true, it probably is.


I don't mean to burst your bubble or anything, but $4.5 million isn't exactly chump change.

 

[ErikCLDR]

I know a guy that owns a ski resort. He went to college with my dad, basically never did anything, dropped out, worked at the ski resort. One day his parents died and left him a ton of money and he bought the ski resort.

Its probably the biggest mountain in CT, which is not very big, but a lot of people go to it.

A family friend knows the owner of Okemo. They both train dogs or something.

 

[CalBoy]

I know a guy that owns a ski resort. He went to college with my dad, basically never did anything, dropped out, worked at the ski resort. One day his parents died and left him a ton of money and he bought the ski resort.

Its probably the biggest mountain in CT, which is not very big, but a lot of people go to it.

A family friend knows the owner of Okemo. They both train dogs or something.

And this relates to the OP's situation how exactly?

 

[Sun Baked]

I'm willing to bet that even though it seems like the property makes 20k/month, there are many costs you aren't aware of. For example, if the property is assessed at $4.5 million, the property tax, even if it is only 1% (pretty low), then that's a good $45,000 per year. That comes to almost $2,000/month. Add in insurance (I don't know commercial rates, but I'm guessing it's at least another $1,000 per month), and that "profit" margin begins to loose its appeal. You also have to factor in security, maintenance, utilities, etc.

If you consider the fact that you'd need $450k at the least for a down payment, you see that there are better investments out there. Heck, a basic 5% CD will earn you decent money. If you invest in stocks and such, you could make a pretty good return without having to bother with all the trouble of owning land.

Don't forget the legal bills, creating a new LLC, the tax advisor's bill to make sure you structure the deal correctly etc.

You also need to hire a professional management company to further distance yourself from lawsuits of tenants and their customers/guests.

Likely a $100k bill just to form a structure for a newbie to the commercial real estate business, and to make sure you are protected from the first person to fall down the stairs, or slip on ice at the doorways.

But a ski resort town. Gets all its revenue on season, and is a money pit the rest of the year. And there are the good seasons and bad seasons.

 

[CalBoy]

Don't forget the legal bills, creating a new LLC, the tax advisor's bill to make sure you structure the deal correctly etc.

You also need to hire a professional management company to further distance yourself from lawsuits of tenants and their customers/guests.

Likely a $100k bill just to form a structure for a newbie to the commercial real estate business, and to make sure you are protected from the first person to fall down the stairs, or slip on ice at the doorways.

But a ski resort town. Gets all its revenue on season, and is a money pit the rest of the year. And there are the good seasons and bad seasons.

^^All true. For some reason, I get the feeling that these sellers are keeping something from the OP.