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View Full Version : HELP! Need input/suggestions



asanve
05-17-2009, 02:59 PM
Background: I live in a small town of about 30,000 people in Northern California. In the surrounding cities (of a 40 mile radius) there are approximately 580,000 people. I have been decorating for Halloween for many years and over the last 7 years have had a home haunt that is manned by our Boy and Girl Scouts Troops. All money made is split between the 2 groups and used for outings and activities for the kids. We have had nothing but positive feedback on our haunt (some people saying that it is better than Six Flags, Pirates of Emerson, the haunt at the local fairgrounds, etc.) We have decided that we would like to go pro with our haunt as it grows bigger and bigger each year. I don't know how much longer the city will turn their heads and allow us to continue at my home. My home sits on a one acre lot as do the 4 other houses on our street. Everybody on my street is cool with it. I just worry that as it grows problems may arise that would affect my neighbors and that is not something I am okay with. I have been on this forum almost daily since I discovered it last Aug. or Sept. I have read nearly everything posted since that point and have asked numerous questions. I have purchased Allens book and read it in its entirety.

On the next street over from my house there is a home that is 2,064 square feet and sits on almost 3 acres. To the right of the main house is a shed-like structure that is 16' by 21'. It houses the well for the property in one small corner but is nicely constructed and could be used for whatever. There is a large pool out back (which is currently empty), and a huge warehouse structure out back which is approximately 40' by 60'. I believe there would be no problem being able to put a haunted house on this property as the other occupants on that part of the road are as follows: Brownstone Gardens (owner occupied but they have beautiful grounds where people get married and have receptions), Fairview Heating and Air Conditioning (owner occupied and run the business out of a warehouse on the property), a church (there is also a home on the property where the pastor and family live), and a home for severely disabled children.

Near as I can tell with everything that I have read, no bank is going to loan money to start up a haunted house business. One needs to have the capital to start their venture or they will have little chance of success (at least that seems to be the general consensus on this forum).

The house I have described above has been badly abused. The main wiring was cut in the box and many other wires and breakers destroyed. I have already had an electrician come out and look and he quoted $20,000 (on the high side) to fix the electrical damage. The carpets and linoleum have been ripped up, destroyed, or totally removed. The counter tops in the kitchen and bathrooms are there but all the sinks have been bashed out and plumbing needs to be repaired. It needs paint, there are no kitchen appliances, and there are a few broken windows that have been boarded up. Three years ago when the property values out here were soaring this was a beautiful house that sold for $1.5 million. It is listed today for $343,000. According to my real estate agent and mortgage broker, because of the condition of the house, no bank will loan money to purchase this house because it is not in "move in" condition. They said these types of houses must be purchased for cash, renovated, and then sold or refinanced by the bank. She also said that it probably could be acquired for as little as $300,000-325,000 since it would have to be a cash purchase. It is also a foreclosure and bank owned.

Herein lies the problem I need HELP with: Before the stock market "crash" I had the funds to purchase this property outright, but along with everyone else I have lost my "ASS"!!! I do, however, still have enough funds to do the renovation that are required and would have some money left over. My idea was to see if there was an investor that may be interested in putting up the cash for the purchase of said property and I would pay for the renovations. I believe that all renovations could be done quickly and we would be able to open in time for Halloween 2009. At the end of one year from purchase, I would be able to refinance the property (as it would be in livable condition) and acquire a bank loan to repay the investor the original purchase price and 15% of that price (i.e. loan of $325,000 plus $48,750 interest).

Question: Is there anyone that knows of investors that might be interested in this type of investment, either on the forum or otherwise? I have heard of "angel investors" and have done some reading with regard to these type of investors. Does anyone have any experience or knowledge with this sort of investor? Is this a feasible idea or is this yet just another one of those "wild hairs up my ass?" I need all the help I can get here with regard to this situation and would appreciate hearing from anyone who can give me input, help me make an informed decision or just tell me its "CRAZY" and give it up!!!!!

Greg Chrise
05-17-2009, 03:45 PM
The investor is already there. The previous/current owner who isn't very likely to have someone walk in with that much cash when there are so many properties available everywhere. The Vogue thing now is property that is already considered multiple rental units, you are describing what could be zoned commercial and commercial property is about to crash as well.

A haunted house doe not need to own the property. Nor plan to renovate anything. It just needs space available. It could be used seasonally until this guy does run into someone with money or a deal could be made that as the event makes money the charity would be the one to help him out of this situation, by grooming and maintaining the property.

You actually never want to really fix it up. You can run a seperate power pole, your own electrical harness and that goes with you if the property get sold or until an afordable, completely realistic rent/ owner finance situation can be realized.

The guy would be helping the boy and girl scouts and the boys and girl scouts would be getting an education in helping the community. You get to have your haunt and build up proper facilities that are gypsy in nature and will last, be available in any location in your area. You develop and understand how many people actually come to your event and from this can prove percentage returns are responsible financially or you are being some crazy philanthropist and the boys and girls need to do some car washes if they want to keep scaring.

There are places in the country where you can by 3 acres for $6,000 and for what you describe in money, 174 acres that keep growing into a scream park, christmas and lake side destination. That is also where the investment is. Where you can buy low and make something. Also the return percentage is generally their money back plus 30% for cash while the wall carriers get about 10 to 20%

You should be more on the level of getting this guy to completely donate the whole property to the boy scouts as a tax write off. That way it no longer is something he has to keep mowed and pay property taxes on. He gets free tickets to the event and the knowledge that he did something great. Or there is something going on with the history/present owners like it is someone's kids hoping to cash in a deceased parents life savings and you would just have to let it pass until the taxes never get paid and you can get the whole thing for $5,000 in taxes.

Going from home haunt to pro charity haunt can be done completely for $10,000 to $25,000 by renting property for only 2 to 3 months or having said property use donated.

If you ever get rich again or can prove the attendance to your vent is producing big returns, then things change. Then you decide to be the one to help out the boy scouts and pony up for the property for ever. It isn't getting sold at any time requiring them to find a new place unless they monetarily outgrow it. Like attracting 3 other regional troups to operate multiple haunts etc seeing more than 10,000 to 18,000 people. Then you have parking problems and if everything was managed properly, you ave all the resources already donated and on hand to go to the next level.

You have to get everyone motivated and involved more on the line of you can do a haunted house or clean 2 miles of highway to prove how great the boy scouts can be.

Greg Chrise
05-17-2009, 03:57 PM
This same money you think should go into renovations should actually be spent on advertising the event and building everything else out of found/donated crap. Even securing a location and finding local haunters that have all the haunt stuff and no location to make a grand first time out. If not haunters, cross over people that have the gear required to put on an event for a month. Lots of people will use working an event pro bono as a notch on their resume as experience.

asanve
05-17-2009, 05:46 PM
I'm so sorry but I neglected to mention that the house is owned by the bank. It was foreclosed on a couple of months ago.

Greg Chrise
05-17-2009, 07:44 PM
That is just as great the bank can seasonally be helping the boy scouts until they have a buyer and won't get busted for having a property sitting un maintained in the time being.

There are a long list of properties I'm sure they have and the priority of how agressively they are marketed vs, kept as an asset is relative to how it is on taxes and maintenance. Pay the taxes for them, how much are they, the boyscouts cut the grass.

All they can say is no. But they are going to be able to get in TV helping the community and old ladies will come put money in their bank for toasters and you don't owe anyone anything. You haven't made a promise you can't keep, everyone wins.

The following year perhaps they have the same situation with a commercial property warehouse. The cycle continues. Then when banks are loaning, guess which bank knows your history of helping that might be inclined to help you?

Greg Chrise
05-17-2009, 07:50 PM
In my town I remodeled a large swimming pool of a guy with 17 kids. He has 45 acres of property and a big home south of town. In town there is a street named after him and a gymnasium that bears his name at an elementary school. He worked at the bank and many other businesses to raise his family and help the community. He was the janitor.

Greg Chrise
05-17-2009, 07:54 PM
Plus there is the point that as an asset, the bank doesn't want to sell until the market recovers. Just because it is listed only means they are fishing as a matter of routine. It doesn't mean as the real estate suggests they will sell for a lower dollar just because it has been foreclosed on.

Greg Chrise
05-17-2009, 08:00 PM
Don't talk to the realestate people talk to the bank.

drfrightner
05-18-2009, 12:53 PM
I dont' think you'll find investors on this site but you should ask around people you know, people who already own other business. Try even talking to the person who owns the property!!!!

Larry

RJ Productions
05-19-2009, 01:00 AM
I'd check the zoning first. If the property isn't zoned correctly, you'll spend a lot of time and/or money for nothing!! Just because there are other businesses located on other properties does not mean this property is zoned. You may be able to have a warehouse, but a building that will utilized for public assembly may not qualify.

How much drive by traffic? If people can't see you or get to you easily you will need to spend a lot more on advertising.

As others have stated, getting a business loan for a seasonal business is VERY difficult. It would be bad enough if the business was say a summer business, but when you tell them it's for a Haunted House they have this image that it's a one NIGHT business!!! Get past that and you can't even really say it's a month long business since you are usually only open 20 or so days!!

Private investors is usually to only way to go. Then you have to watch out how much input these investor get. People lend you money, then they want to tell you how to run the business!! Which is probably why most Haunters fund themselves!!!

Kelly Anderson
05-21-2009, 12:36 PM
I totally agree with everything greg has mentioned. The other guys brought up some very valid points as well.

If in deed you deside to persue this place, and the bank would let you use it, and probably at a reasonable price, that would be great for the scouts. Nice thing if it ends up not being the place you want, you can pretty much walk away from it.

However, if you do like the place and continue to use it from one year to the next without a buyer coming in, its quite possible that the bank could hand it over to you guys.

It almost doesnt seem possible, but thats exactly how our haunt (House of Shadows by the Boys & Girls Club) acquired the building we use. Our building was once an infirmery for the Wisconsin State Child Center. After our building was closed down due to being so far out of code, and the extremely high costs to renivate, the bank let us use the building for a couple of years and then eventually gave it to us.

Kelly Anderson
HauntYourHouse.NET

asanve
05-28-2009, 06:23 PM
Thank you all for the suggestions. Unfortunately, before I could even find out who the bank was that was holding the mortgage on the house, someone came in and bought it. Guess it wasn't meant to be but it sure was a great set-up. I have asked around with regard to property where we could set up an outside haunt, but no one around here seems to be too interested. And I do have an issue with the outside haunt because I do have many props that should not be out in the weather. Stuck between the proverbial rock and the hard place!!! If anyone has any other suggestions please feel free to let me know. Thanks!

Greg Chrise
05-29-2009, 01:34 AM
On a Nightline ABC report, sale of homes in Arizona, Investors come in representing a number of partners and basically pay cash for property and as such do not have to get the inspections, see the real estate people, talk to the bank or anything while the average public no matter what the offer is are ignored because they are seeking financing.

Seeking financing even pre approved amounts to bargain that will be a loan are having to only deal with property that is ready to move in whereas the investor can take a property that has been vandalized and stripped because it is a cash transaction, no questions, no liabitily.

In some other deals I learned you can just buy the note for the full amount at the bank on a property. However, usually it is the bank presidents and vice presidents that are taking these opportunities and even those with big cash are put through the mill rather than give up a deal in lots of cases. This is where the long period of time allowing use by the community comes in. The bank presidents are able to maintain their little project until they can secure the funds, they just keep floating the paper. Unless the taxes get behind too much.

It is very hard to get the straight story on any piece of property. Real Estate people aren't any better plugged in than the general public beyond having a list of where the properties are and what places might be accepting applications for financing. You have to be able to know how to read an opportunity and who to weasel.