This Was A BAD Purchase....

In real estate, finding opportunities in distressed properties can unlock significant value. Recently, Logan Fulmer and I teamed up on a unique commercial real estate investment in Dallas, Texas, and it’s a perfect example of how distressed properties, when approached strategically, can turn into incredible opportunities.

A Partnership Built on Trust and Opportunity

A few weeks back, I had Logan Fulmer on my YouTube channel to discuss the process of buying distressed properties and foreclosures. What you didn’t see behind the scenes was our conversation about future investments. Logan, a specialist in distressed real estate, mentioned that if he came across something interesting, he would let me know—and true to his word, he did.

Fast forward, and my partner Tim Macy and I found ourselves in Dallas, checking out an eight-unit commercial property worth over $2 million. Logan brought us in on this deal, and we jumped at the opportunity. This partnership was built on mutual trust and a shared goal of protecting and growing our investments.

The Deal: Distress Equals Opportunity

This particular commercial property came to us under interesting circumstances. The previous owner, a doctor, had built the property but had not managed it well. As a result, tenants were paying well below market value—sometimes as low as 50% of the going rate for commercial spaces in the area. Commercial properties, as you might know, are valued based on the income they generate. Lower rents meant lower property value, creating an opportunity for us to step in.

The property was about to hit the market when Logan’s network of brokers gave him an early look. With the owner eager to clean up his estate, we made a low but workable offer. The deal came together because of our ability to spot an opportunity in a distressed asset.

Seller Financing: A Key to This Investment

One of the standout features of this deal was the inclusion of seller financing. In addition to securing a good rate with the bank, we negotiated a great seller financing deal with an assumable note. This structure not only makes the property more attractive in terms of cash flow but also offers a major advantage when we decide to sell the property in a few years.

An assumable seller financing deal could be a huge win for us, especially if interest rates rise in the future. It’s these kinds of unique opportunities that we seek out—finding ways to lower risk while increasing potential upside.

Adding Value Through Renovation and Better Leases

While the property itself doesn’t need major structural work, there’s still room to improve. We plan to spend about $300,000 on light cosmetic upgrades: painting, cleaning, replacing a few doors, pressure washing the parking lot, and restriping it. These updates, although minor, will make the building look much more contemporary.

However, the real value comes from the tenants. Several leases are expiring soon, which gives us the opportunity to raise rents to market rates, essentially doubling the rental income. The area has only a 3% vacancy rate, meaning demand is high, and new tenants are likely to show up quickly.

Investing in Commercial Real Estate: Lessons Learned

This deal taught us a few key lessons about real estate investing:

1. Relationships Matter: This opportunity came through relationships—our connection with Logan and his broker network allowed us to see the property before it hit the market.
2. Seller Financing is a Game Changer: Creative financing structures, like assumable seller financing, can make or break a deal, especially when it comes to managing cash flow and planning for future sales.
3. Distressed Doesn’t Mean Bad: Just because a property is distressed doesn’t mean it’s a bad investment. Often, it’s quite the opposite. With a little love and strategic improvements, distressed properties can generate incredible returns.

If you’re interested in learning more about distressed properties, commercial real estate, or investment strategies, Logan Fulmer is a great resource. You can follow him on Instagram at @LoganFulmer, where he shares tips, courses, and strategies for breaking into real estate investing.