Once upon a time, there was a young girl with big aspirations! That little girl is much older now and has had the time of her life learning, growing, failing and learning some more. Real estate, construction, leasing, investing, selling; it’s been her life blood.
Some kids grow up dreaming of being a fireman or astronaut. This little one had ideas of owning real estate. Scouring the real estate section was entertainment for her, true story.
Fortunately for me, real estate is an easier career path than being an astronaut, and pays better than being a fireman. I’ve moved through life owning property, overseeing a new development from ground up, managing apartment communities large and small. In a word, it’s been awesome.
Life is always a straight shot, right? Pssh.
A Side Project that Became a Sidetrack
In the early 2000s, a friend approached me with “such a good deal.” It was a bar/restaurant, three stories high! In the middle of a quaint rural town built around a slate mine, hence its name: Slatington. The first thought that went through my head – and probably the one I should have listened to – was: “I don’t know nothin’ about running no bar!” But I loved this historic building, which only served to fuel my partner’s excitement. Before I realized what happened, I was looking at purchasing a mixed-use building. An 8,040 square-foot historical building comprising a bar, kitchen, second floor with 4 apartments, and third floor that was completely open, to be exact. Oh and, lest we forget, a walk-up ice cream store in the summertime. Talk about mixed-use! Funny little tidbit about business funding though: most financiers prefer borrowers who know, well, something about the business they’re purchasing. Fancy that!The Apprentice: Dive Bar Edition
Before we went any further, we decided we needed to learn a thing or two about the industry. My partner and I worked alongside the owners of this mom-and-pop establishment, a couple in their sixties who looked as if life was all but easy. Mind you, the town was dominated by a slate mine where most of the work shifts ended at 7 AM. So that is when our morning rush began.Free Video Training: Passive Income from Rentals
Cooking breakfast and serving beer. Yes, together. Quickly, I learned how to sling hash, pour the perfect pint and fill a shot glass (yes, there is a correct way). My days were long and tiring.
However, I was gaining knowledge and experience. I even took two courses, one for food safety and another about how to serve alcohol properly. The whole method to my madness was to have some type of background I could hold up to my eventual financiers.
There were several upstairs apartments already rented, but the entire third floor needed a gut rehab. Everything from walls to fixtures to appliances. There were a total of four apartments on the second floor, that were in rentable condition.
…But Money Still Doesn’t Grow on Trees
Then the search began for a mortgage. Looking through my contacts, and making several disappointing calls; I quickly became discouraged. The current owners of the bar kept terrible records making it very difficult to ascertain a true picture of profits and losses. They lived hand to mouth, literally, living on top of the bar, eating the bar food and just barely making it.
In retrospect, that should probably have been a red flag. But we were in love with old place by this point.
How could I show a potential bank that I was worth the risk? For that matter, how could I show the bank that this old property was worth the risk?
Enter: real estate experience. That was the route we took for this mixed-use building. I had to show my industry experience and work history – a literal resume. The lender asked for everything but my first-born child.
We had to provide a precise business plan, complete with projections of use and occupancy numbers. After stating our case, and going back and forth with the lender a dozen times… we got the loan! Not, mind you, at the best interest rate in the world, but I knew it would get us started.
And it did.
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My mixed-use investment property, in all its glory!
Blood, Sweat & Tears
We put much sweat equity into rehabbing this ancient building. We turned this mom-and-pop, “hole-in-the-wall” dive bar into one of the town’s favorite meeting places. We had themes, parties, live music on the weekends. We packed the house.
My partner and I did much of the updating work ourselves. Talk about a hands-on project! After the first year, I was able to refinance and drop the interest from “ouch” to “well, it’s manageable.” We had full occupancy in the apartments, which paid for the (suddenly cheaper) mortgage.
Just as we started work on the third floor, I became very ill. I was traveling two hours round trip on most days, as I lived far away. My doctors, in no uncertain terms, declared that I needed to stop.
So I was forced to throw in the towel. After owning this beautiful old battle axe of a building for only four years, we had to sell it.
I did not make a mountain of money on the venture.( Adventure? Misadventure?) But I walked away smarter and wiser, with a bit of profit and more than a few fun memories.
Aesop: “Is there a moral to this story?”
It is possible to get very creative with financing. It never hurts to ask. So often we don’t ask for fear of hearing “no” when, had we asked, we would have gotten the “yes”.
As for the opportunity for financing; truly it is as vast as the imagination and creativity are. There are sellers who may hold part of the mortgage, lease-purchase situations, funding from multiple sources; the list goes on.
Never lose focus on your goal! Knowing absolutely nothing about the food and beverage industry, I went on to raise the money needed to buy this building and business.
I also learned to focus on what you know. The stress of owning and managing a bar just about did me in! My forte was real estate, and that is where my focus and goals should have remained.
And today that is exactly where they are!
Ever bought a mixed-use investment property? Thinking about it now? Hope my story didn’t scare you off!
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This is the kind of thing I wish I’d done when I was 25 with a few girlfriends. Sounds like a blast! But maybe a little exhausting too