This episode examines a $350K North Carolina commercial property with 10-18 month permitting timelines, demonstrating how extended hold periods demand aggressive purchase price adjustments.
Key Takeaways:
- Hold Time Destroys Returns Even with clean $700K exit pricing, 10-18 month permitting delays plus $5-6K annual taxes and potential buyer fallout require purchasing at 30-35% of market value, not the typical 50%.
- Commercial Requires Tighter Comp Windows Data older than six months carries significant risk in this market—comps beyond 12 months should be immediately discarded regardless of asset class scarcity.
- Motivated Doesn’t Mean Desperate Enough A seller wanting $450K in two weeks for medical expenses still hit the pricing threshold—the deal needed to drop to $250K to properly account for 18+ month worst-case hold scenarios.
Listen to the full episode for tactics on pricing extended hold period risk into acquisition offers.
(Podcast transcript below)
Welcome to get serious here, trying to squeeze in a recording right before flying out to the affiliate workshop for acquisition.com from Alex Hormozi’s money models book launch here. Super, super excited to be heading out there. I’m sure I’ll get a lot of takeaways. and you know, just wanted to mention, got a ton of feedback from that, Florida.
350k scam article and podcast that had prepped a number of you mentioning that you’ve dealt with fraudsters and scams also in the past, you know, even recently and unfortunately some of you guys had transactions that that went fully through so that actually deal with the title claim nonsense and kind of unwinding. So, you know, we were fortunate to avoid that. But again, it’s
Tricky, tricky industry. You got to be careful out there. A lot of unsavory individuals. So appreciate you all sharing some of your other stories. And I know some of you guys asked for the AI prompt that we’re using now to confirm or at least get as close to confirming IDs as possible with some AI image analysis. So I will be preparing that for the.
Following article. I just want to make it a little bit more general and robust versus just the very specific one we did for our situation I want to give you something better And and more generally applicable. So Appreciate you all asking about that as well. And then today I was just review it, you know, I was reviewing a few deals over the weekend here and including one today, which was a
uh, you know, higher priced commercial property, um, in, uh, North Carolina, that like seems pretty solid, uh, you know, a bit over an acre and probably reliably would have a exit pricing of, you know, 700 K ish, uh, approximately. Um, but the, uh, the problem is, that there’s just
Really extensive permitting and delays that go into that. that even if, you know, we were priced to identify a buyer within, um, you know, even a couple months of, of listing. Um, and I actually wouldn’t be that surprised. It’s, you know, commercial properties. We’ve been burned on them in the past before, usually very skeptical, you know, lower, um, you know, smaller buyer pool, uh, generally, and, you got it.
really make sure you’re having a property that actually makes sense and can be comped appropriately. Commercial properties are just on average harder to assess and the data quality is rarely as good as Rezzy or recreational or even Ag properties for the most part. But in this case, they’re
did seem to be a pretty healthy market. you know, again, folks were sending us some comps that were, you know, even two or three years old, which, you know, we just throw out, you just can’t. I know commercial properties can be lacking in terms of comps, but, know, again, especially in this market, anything beyond 12 months lagging, honestly, more than six months lagging just has to be viewed with significant skepticism, before, potentially purchasing. So
know, we just wanted to be mindful of that, but even accounting for, you know, a bit more recent sales, like there was a pretty, you know, pretty solid market for it. Like it’s rare. Usually a lot of commercial properties sent our way. Like there’s some key characteristics wrong with it, or it’s just mispriced entirely or very slow market or nothing moving commercially. you could be looking at like multiple years on the market in this case, it wasn’t,
But, you even if it could sell, you know, for 700, maybe a bit more, I, you know, some of the realtors associated with it thought it could go for a bit more. I’m, I would be more conservative in terms of looking at the other comps that, that were available there. but, you know, like I mentioned before, even if you could find a buyer relatively quickly, you know, the DD period is going to be significant and you know, full close won’t happen until they can get everything permitted.
and kind of site plan in place and so forth, which, you know, best case seemed to be like 10 ish months. maybe worst case closer to like 18 months. So, you know, it could be a really significant whole time, especially if one of these deals falls apart and you have to restart that whole process. Like you’d have to just bake in a super conservative timeline to sell.
So I would be like thinking, yeah, this could possibly be like a two year full hold. Even if we thought, you know, pretty positively about this, this property, which we’re not going to rule out. You know, again, in this market, I think you have to be creative. It just, you know, you have to price the risk appropriately. So in this case, you know, this seller who had bought the property for 400 K bit over 10 years ago,
Yeah. Some medical situation and, um, you know, once 450 K within two weeks to close, um, you know, and these are the type of situations we look for again, distress within them in the market, motivated sellers, blow market value off market deals. Like this is the bread and butter of the land industry. Um, and you know, if
It was more conservatively valued at like 900 K to a million. Like that could potentially make more sense. Um, and even if it could sell for that amount, like I wouldn’t bet on that looking at the comps. I, and it was even hard to assess the comps cause it looks like most of the comps were selling off market too. So I couldn’t even see how long the, um, uh, market timing was as well and throwing in some additional discounts. So like, I, again, more conservatively estimated.
650 to 700 K to exit this thing. So even right off the bat, like an initial possible purchase, we would want to be getting the seller closer to like 350, but accounting for, you know, an anticipated very long hold time, even if we found a buyer and we’re under contract. But if it’s like a year plus hold time, we could do that. Um, but I would want to price that risk more appropriately. So, you know, we went back to the land investor who sent us the deal.
And I was like, Hey, if you could get this, this guy didn’t, know, we, know this seller is motivated, right? I mean, how, much the medical expenses, mean, near half a million dollars. Um, you know, can we get a bit lower than, than that? Uh, you know, being, being mindful of the situation, like, but you know, also just explaining like these super long hold times, tricky market, et cetera. Can we do a quarter million? If you got, if you can anchor this guy at 250 K, um,
where for sure we would not lose money on the deal, but even if we’re holding it for a while, taxes are between like five to six K per year two. So you have to build in at least some holding costs to the deal. So just being mindful of that, but being able to price risk appropriately, it’s one of…
best skill sets in business. There’s just, you know, a lot of folks don’t do it properly. Sometimes we’ve definitely done it wrong as well too. Yeah, just to note like the transactional deal, picking up pennies in front of a steamroller that, you know, we’ve nearly exited out of as of, you know, this anticipated next week for instance. So, you know.
There’s constant learning lessons there too. But again, especially in this market and you know, there’s distress and motivation on the sidelines here. Like you have to be able to explain these situations to the seller. And if you know something is going to be at least a year long hold, like it has to be a better deal plus being a commercial property. So, um, yeah, if, we can get it closer to 30 ish percent of conservative market value, um,
then that’s gonna actually make it a lot more attractive, but doing a 50 % deal or even a bit more than 50 % type deal, even with higher absolute value, just doesn’t make any sense. Again, especially in a more difficult real estate market on average nationally at the moment. So just wanted to mention that there, give you some insight into our thinking.
Again, how to appropriately price risk to keep this in mind within your own business for various acquisitions here. Like don’t get pushed around by sellers. I know they’re going to have their own obligations to take care of and you know, it’s hard to get your marketing dollars to work, know, mail cold call type. Like it’s all more competitive here, but you know, people are looking for a half million dollars cash in less than two weeks. I push back on that, you know.
We can get you some solid cash, but like there’s not that many financiers out there that can produce, you know, six figure checks on a routine basis. you know, if you’ve got to cut that even close to half and still, you know, get a quarter million dollars in cash to fund your medical expenses could be pretty interesting there. you know, figure out how to negotiate these deals better. And, you know, we can all.
potentially make a lot more money and still get the sellers what they need. it’s just a route of doing business wherever every party gets what they’re looking for. So hopefully this one is helpful today here. So seriousland.capital for any funding needs, land daily diligence Facebook group. A few more folks are sending some deals here. I won’t get back to it until Thursday. Obviously going to Hormozi’s thing today, flying out and then landpricer.ai.
pushing, pushing, pushing for more data parsing. I had a bigger meeting with a potential partner earlier today as well, keeping things moving forward, most reliable line pricing on the market. With that, subscribe and share everybody. Take care now, talk to you next time. Bye.
