My husband and I purchased a building this last August. We were lucky enough to have my mother finance it, and she is giving us very favorable terms (thanks mom). We finally have a renter, and they are between 2 and 4 weeks away from the grand opening. We have another unit to rent, but we can make it for a while longer with it unrented. I will attempt to explain some of the things I wish we did differently.

We got a fantastic deal. Overall, we saw a great historic building, right in the center of town, and we knew we had financing and a low sale price. We knew that the value was about twice the sale price, but that we got for 7000 under the asking price, right in the middle of the real estate boom. Above the building is a nearly 5000 sq ft. apartment that has been partially renovated. Sounds perfect, right?? Well, almost. It was a deed in lieu of foreclosure, which means that the previous owner turned it back over to the bank instead of having them foreclose. The bank can't keep this property too long and they will take a loss on it because it doesn't look good on their books. So, that being said, we could have gone lower. Since this was our first commercial real estate deal, we wanted to make sure we got it, so we bid a little higher than we should have. Second, its valuation is too high. So, even though it looks like an exceptionally good deal on paper, it's not quite as good as it appears.

Also, the bank let a renter stay for only the cost of utilities. This should have freed up money for the person to make the best of their business. Instead it made them cheap. If your landlord told you that you no longer had to pay rent as long as you pay for your utilities, you might very well consider dropping off your trash at any dumpster you can find instead of paying for trash service. In truth, I wish this person had done exactly that. Instead, she used about 3/5 of the building as a garbage hold. There was literally trash stacked to the ceiling in some rooms and filling the garage. She did NOT take it out when she left, and when we purchased it, it became our problem. I literally filled a 20 yard dumpster, which is the size of an 18 wheeler container, in one hour. I did NOT get everything. In fact, I haven't gotten half of it out. I did manage to get all the actual trash, but now we have the leftovers from her business that she decided would never sell.

Also, there are several problems that because of the trash, we never saw when touring it. But we bought it as-is. If I had it to over again, I would have still bought it, but I would have looked at it more diligently. We immediately spent an additional $5000 fixing it so that it was able to be rented out. This included putting a wall in the back, the trash removal, and various things such as paint, flooring, and electrical.

Tommorow I will discuss the actual aspects of being a landlord, and the things I will do differently next time. Yes, there will be a next time. Even though it has been hard work and eaten up every spare minute since August, I am ready for my next real estate deal. That will be part three.