Originally Posted by Forgotmyhat

#1 Learn how to value property. This is where books and videos come in.

#2 Formulate a plan. How do you intend to make your money? Stabilize a distressed property and sell it? Cash flow for years? Have an exit strategy.

#3 Be patient and wait for the right property that fits your plan. Don’t buy on emotion or out of impatience.

#4 Figure out how to close the deal. Don’t be afraid to get creative here. Put financing together. There are a million ways to acquire a property. It’s not what you’re familiar if you’ve only bought houses.

I’m happy to share the details of my experience with this particular property. I bought it for 575k with 70k down. I got financing through a big bank but they wanted 35% down. So I had to seek private financing for the rest of the bank’s requirement (see #4 above). I paid that off as soon as I could because it was costly. But I needed it because I knew this was the right property.

The property has 6 offices and was about 35% vacant by square footage…which is a lot. This affects the NOI (see #1 above), which in turn affects property value. So I got a good property, albeit financial distressed, for a low price. My game plan was to make some small cosmetic improvements and patiently wait for the vacant spaces to get leased, all the while bending over backwards for the existing tenants to make sure they stayed. Once I got the spaces lease up…it took more than two years…and with rent increases, the NOI has almost tripled, which results in a current value of around $1.2M, of which I owe $340k to the bank.


The $5k a month is cash flow. This is after all expenses (utilities, repairs, property taxes, insurance, etc) and debt service (loans). Like I said, money in my pocket, before income taxes…different subject. But I will say in addition to depreciation, your own children under 18 as employees are gold mines.

Property taxes are $14k a year. I challenged the assessor’s value last year and won. Most property owners pay an attorney to do this, but I did it myself. It was easy. Utilities around $1k a month, depending on season. I pay for almost all exterior repairs. But you can structure new or re-negotiated leases however you want. For example, this property went through a rash of broken windows (vandalism) that I kept paying for. So the next time I negotiated a new lease I made sure it had the tenant responsible for windows. The world is your oyster when it comes to leases…as long as you can get a tenant to sign it.

It’s not necessarily easy money, there have been plenty of frustrations. But I have learned a ton, it’s been moderately enjoyable, and the return is unreal. Seriously, look into it and don’t be afraid of the unknown.