Buy Shoppes on Sawdust, offer $2.65M
The bank decides the loan, not the 20% rule
A commercial lender sizes the loan from the building's income, not from our down payment. Three numbers do all the work.
Why every asking price is too high
Each dot is a building's income as a percent of price (its cap rate). The line is what the loan costs us each year. Below the line, borrowed money loses money.
Every listing, graded
Walid's five plus what the daily scan has turned up. Money lines use the assumptions in the calculator below and update when you change them. Tap a card's "Try it" to load it into the calculator.
Also on the radar
Different shapes (single tenant, fixer) that showed up in the same price band. Worth knowing about, not the first call.
Passed
The plan: buy, improve, refinance, repeat
Increase rent and yearly income, then ask the bank to lend against the higher value.
- Buy with room to improve. Keep enough closing cash; the monthly budget does not replace a down payment.
- Pay Dad and improve the building. Walid and Yousf put in $20,000 a month together. Dad gets $5,000 total, $2,500 from each son. The remaining $15,000 covers a shortfall first; property cash left over adds to improvements.
- Show the higher income to an appraiser. Value = yearly income after expenses (NOI) / cap rate. At a 7% cap, $10,000 more yearly income adds about $143,000 of value.
- Refinance and repeat. New appraisal x 70-75%, less the purchase loan, is estimated cash back. Aim to recover Dad's $700,000 in 24-36 months and use the next savings for another building.
Improvements are paid from the monthly budget. We subtract them once when showing family cash still invested, not again from refinance proceeds. Estimates exclude refinance fees and use the original purchase loan balance, so principal paydown is not counted.
Dad's $700,000 should be a loan from Dad to the LLC at the IRS applicable federal rate, so it is not a gift and the building is not in Dad's name. The $5,000 a month is the payment on it; ask the CPA to set the rate.
Cash back at refinance
LTV-only estimates at 70%, before fees, after the projected income is reached. Green returns cash; red needs more cash. Income coverage can reduce the loan.
Value today vs stabilized
Purchase price uses our offer, capped at ask. Future values depend on the estimated rent, costs and cap rate.
Run any price through the bank's math
Change the rate or Dad's cash and every card and chart on this page follows.
Assumptions shared by the whole board
Loan cost at these terms: of the loan per year. Dad's cash alone closes about of building at a 7.55% cap.
Property pick one or type your own
What each one costs the family
All at the assumptions above. Blue is Dad's $700,000; amber is what Walid and Yousf would add.
Asking price vs our offer
Offers are built from the building's own stated income at the cap rate the risk deserves.
Cash to close
Left over each month after the mortgage
Income minus the loan payment, at our offer. Negative means the brothers write a check every month.
Return on the cash we put in
Yearly cash left over divided by cash invested, at our offer. A savings account pays about 4%.
The letter of intent
What happens next
- Walid calls STRIVE (Jake Dutson) for the Kuykendahl Plaza package: rent roll, leases, 2025 operating statement. One call also covers Navasota.
- Yousf gets a rate quote from Stellar Bank (Julie Loreto) on a $1.9M loan, 25-year amortization, so the 7.25% here becomes a real number.
- Sawdust: ask Northmarq for the rent roll and confirm the leases are triple-net before the LOI goes out. Open at $2.55M if they push back; walk above $2.7M.
- Form the LLC in Walid's and Yousf's names. Dad's money comes in as a member interest or a family loan, never as a purchase in Dad's name.
- Decide by Nov 9, the LOI's expiry. If Kuykendahl's package shows 7.4% or better, we switch and send the LOI there instead.
Updates
This board is rescanned every morning. New listings that beat the current pick on cash and return get added here and a message goes to Yousf.