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Monday December 5, 2022
Case of the Week
Exit Strategies for Real Estate Investors, Part 5
Case:Karl Hendricks was a man with the golden touch. Throughout his life, it seemed every investment idea that he touched turned to gold. Karl's passion was real estate, and he was very successful in his investments.
Karl continued to buy and sell real estate at the age of 85. About three months ago, Karl discovered a great investment property. It was a "fixer-upper" commercial building in a great area. While other buildings nearby sold for over $2 million, the seller needed to sell quickly and was asking for just $1 million.
The condition of the building turned many buyers away. It was being sold "as-is," but Karl was not deterred. He could see great potential with the building and knew it would not take much to get it to market condition. Therefore, Karl swooped in, bought the building for $1 million and hired contractors to refurbish the place.
After three months of hard work refurbishing the building, the place looked like new! In the end, Karl invested $250,000 in the building, bringing his total investment in the property to $1.25 million. One month after the completion of the work, Karl was contacted informally by a company that expressed an interest in the building – a $2 million interest! This was no surprise to Karl. He knew the building was another great buy.
After Karl learned about the benefits of a FLIP CRUT, he eagerly wanted to move forward. (See Parts 1 and 2 for a full discussion of this decision.) It looked like the perfect solution.
Question:However, there was still one issue unresolved. There was a $100,000 debt on the property that Karl incurred at the time of purchase. The debt was a major obstacle to the successful completion of the FLIP CRUT plan. What solutions are available to remove the debt?
Solution:Karl has at least five solutions to the debt and FLIP CRUT problem.
Published January 21, 2022