Real Estate Dilemma

[Fishindude77]

So my long term tenant on a piece of commercial real estate has informed me that they may wish to exercise their option to buy pretty soon. I really can't complain as this has been a great deal for quite a few years. Makes sense for them, as they can get their cost down by purchasing rather than continuing to rent.

Really don't need the lump sum cash, so considering selling on contract vs them going to the bank, but either way my routine monthly income from this investment may be coming to a close in the not too distant future. Have really gotten used to this monthly income, so need to be looking for another investment to generate some returns.

Don't know if I want to go thru the effort to set up another piece of commercial real estate at this stage of life. Going to have to figure out some way of putting this $$ to work.

[TexasHusker]

It's hard to find REALLY good income-producing investments, and just as hard to REPLACE them.

About two years ago, I was approached by someone wanting to buy my property management co. I believe the net operating income that year was right around $100,000.

I told them I wanted $550,000 cash for it, and they laughed at me, saying that "businesses are worth no more than three times earnings."

Ummm, ok. I'm supposed to take your $300,000, pay capital gains on it, and then turn around and find $100,000 in income somewhere? THAT is crazy.

Frankly I'm glad they didn't buy it for even $550K, as I would have been in the same boat - it wouldn't be much easier to find $100K a year income with $550K, which really only would have been around $475K after cap. gains taxes.

People are nuts!

[Fishindude77]

May consider doing similar to what you've done with a vacation property. Already have a lake home in northern MI, and my neighbors right next door rent theirs for $3500 per week pretty steadily.

A home like theirs goes for +/- $350-400K and you could surely rent (20) weeks per year grossing roughly $70K. Will have to do the math regarding taxes, mowing, snow removal, cleaning, trash disposal and all of the other misc. expenses, but something like this might work?

I really like farm ground because it is so darned easy, but with today's grain prices, the cash rent price is down and you can probably only net 3-4% max.

[TexasHusker]

May consider doing similar to what you've done with a vacation property. Already have a lake home in northern MI, and my neighbors right next door rent theirs for $3500 per week pretty steadily.

A home like theirs goes for +/- $350-400K and you could surely rent (20) weeks per year grossing roughly $70K. Will have to do the math regarding taxes, mowing, snow removal, cleaning, trash disposal and all of the other misc. expenses, but something like this might work?

I really like farm ground because it is so darned easy, but with today's grain prices, the cash rent price is down and you can probably only net 3-4% max.

It sounds like you might be onto something with the vacation rental. I would do a lot of research to ascertain whether 20 weeks a year is doable in that locale, and gauge the typical rents received for different property types. It could be that two small cabins are more profitable than a single big cabin, or vice versa.