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I was speaking with one of my buyers yesterday and she mentioned that she has a CF positive sober living house that she is looking to sell. She purchased it with a hard money loan that is coming up in a few months (not sure exactly what that means) and she’s simply over managing it.
So I spoke to another one of my buyers, just asking if they would be interested in something like that and they are interested.
Now, I have no clue how to structure this deal or what info I need from the seller. All the seller has told me about the property is what I’ve stated here. Obviously I need to get photos of the property but what else am I looking for?
Any help is appreciated!
Thanks,
Curt
what is a CF positive sober living house??
sounds like i need to do a coaching call about what information you need to get from sellers and how to get the information in a conversational way.
I will post my seller’s questionnaire in the FILE VAULT which will be a guide. but you absolutely cannot tell the seller, I need the answer to all these questions then start asking them like a drill. It needs to be conversational. casual.
Cash Flow Positive sober living house? I’m assuming the rent they’re getting the tenants is making it cash flow positive for them? She said that the property really should be sold to someone that intends to keep it as a sober living house if that helps at all…
Not really sure, hence I’m curious as to how to deal with the seller and handle the deal
Here’s probably the best explanation of a sober living house. Basically just a house that’s supposed to serve as a transition spot for people with substance abuse.
Hey Jackie,
First off forgive me for being naive with this as it’s all pretty new to me. This is my first seller that I’ve dealt with so far…
So… here’s an update on that property. There are actually 2 different properties that she has.
1) 4-plex asking 650K (currently generating 10K/month)
2) Single family home asking 350K (currently generating 3k/month)According to the seller, whoever buys this property needs to understand that they’re buying a business and not just a property. There’s sweat equity in going to the properties and collecting money (wads of cash) etc (which is why she’s trying to sell the properties).
As of now I don’t have any sort of agreement setup with her. Just that she is willing to give me a referral fee for finding a buyer for this.
Right now she has a buyer in line but she absolutely hates him and would love to sell to someone else and the deal still could fall through regardless.
When I was calling my buyer list I asked if they would be interested in a property like that and the general about 4 of them said that they would, depending on the deal(that was before I had any details).
So, that’s where I stand with this. I’m trying to figure out if it’s worth my time and if so, what route I should take.
Should I get some sort of agreement in place from the seller first and foremost just saying that I get x for bringing her a buyer or should I discuss the properties in concept to the buyers that expressed interest or…?
Again, sorry for seeming naive on this as it’s obviously a unique and different type of deal.
Thanks!
-Curt
Curt
What are the properties actually worth?
Is she selling below market? or with seller financing?
Or is she asking retail prices and wanting all cash?
Your buyers are probably whole sale buyers. Can they come up with the cash or get financing for a retail property? Would they even be interested in a retail property if they cash flow is good?
What repairs need to be done, if any?
Sorry, but I need more info to be able to help you determine if this is a go or no go.
Thanks Jackie!
Got the answer to those questions.
Hopefully this will help
1) What are the properties actually worth? If you are asking about a VACANT property: The 4-bedroom house is worth about $320K; 4-plex about $550K VACANT
2) Are you selling below market? or with seller financing? no
3) Or is she asking retail prices and wanting all cash? Yes; these buildings have cash flow 2.5X what ?normal? rent would be for these properties. The ideal buyer wants to run the existing business not just buy a vacant building. Comes completely furnished; fully operational and professionally managed.
4) What repairs are needed, if any? None
Thanks again!
-Curt
any buyer would use their own management team.
honestly this would be a hard sell but it would not hurt to get an option and do some marketing for a month to see if you can find a buyer. Do not do any marketing unless you get an option first.
do not use the angle that they are buying a business. it will not work. These are vacant properties. And worth much less because they is no existing cash flow.
From now, until the end of the year is the hardest time to find tenants. not many people want to move during the holidays.
if the “sober” living is zoned for other things, it would be better to market it the way it is zones and not as a sober living place.
if it is such a great deal, why doesn’t the seller fill it up and collect the cash flow?
Hi Jackie,
Thanks for the very detailed response.
Just for clarification, these properties ARE occupied, bringing in 10K/month and 3K/month in rental income. She simply doesn’t want to manage the properties any longer (supposedly) and wants to unload them.
Any buyer would be purchasing the homes with tenants already living there. The prices she gave are the prices if the homes were vacant.
Hope that clarifies and thanks again for all your help!
-Curt
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