Biker Bar Rehab – Purchase
I got an email last Saturday, with the subject line “ex biker bar” so of course I was interested. After viewing photos of confederate flags, copious black paint, and a ceiling of upside down doll heads, I knew I’d found my next project. The price $9500. I txted back “I’ll take it”. You’ve heard stories about people buying these ridiculously priced properties, but probably don’t know the details of the process. So over the next couple of months I’ll be posting so you can follow this project blow-by-blow. Let’s start with the purchase.
Last summer I drove around Ohio and Indiana meeting other investors and connecting with folks who really know their local area and who I felt good about doing business with. One of those guys is Lee Smith. He has a great network of people who bring him deals and he shares them with others. The person who found this property and got the seller to sign a sales contract is what we call a wholesaler. Her intention was to agree on a price with the seller, then find a buyer who would pay that price plus her fee. Lee got the deal from her and passed on to me, tacking on his finder’s fee. The math looks like this – sales price $6000 + wholesaler fee $2500 + finder’s fee $1000 = my cost $10,500. So I’m paying almost a 50% premium being third in line, but I’m from Denver so a $9500 house is unheard of. And I don’t live in Indy, I don’t know the area, and I’m not out knocking on doors to find sellers so it’s worth it to me to pay for that service as long as the deal still makes sense. Lee sent me some rent comps and sales comps and I’m familiar with the neighborhood from my previous visit, so I felt comfortable making the purchase.
During this week I’ll have the title company check the property history to make sure there are no undiscovered liens or issues with ownership. I’ll also get a quote for vacant property insurance and get my money ready to wire at closing. I can close on the property at home in my pj’s if I want (fitting since that’s how I originally agreed to buy it). Next week I’m flying out to Indy to walk through my new biker bar to plan out the rehab.