Scott Fricke, owner of Robinhood Business Services, shared his entrepreneurial story with an engaged audience at TREK on January 9, 2024.
Scott shared insights relating to purchase of the Quick Print building, Easy Pack business, and the Racquetball Club, highlighting the financial and operational aspects of these transactions. Scott’s experience in real estate and investment properties has helped him assess property values and identify profitable opportunities.
Scott’s latest business venture
Scott’s latest business venture is the acquisition of the Occupational Development Center (ODC), a building with significant opportunity for commercial development. He provided insights on financing strategies, such as leveraging contract for deed arrangements to maximize property value and obtaining favorable mortgage terms. Additionally, he talked about the challenges and considerations associated with property management, including the potential for equity improvement and lessons learned from past experiences.
Scott’s pragmatic and resourceful mindset has given him the ability to identify opportunities, navigate challenges, and make informed decisions in the realm of property and business management.
Process of acquiring the new building and how the zoning was changed to suit the business plans
The process of acquiring the new building involved negotiating the deal and securing financing. Scott initially approached the owners of the building, who initially declined to sell but later agreed to a negotiated price of $760,000. Scott financed the purchase through a combination of bank financing and equity from his home. He was able to walk into the building with no cash down.
Scott pursued a rezoning of the property from industrial to commercial. Rezoning from industrial to commercial has not been a common practice in Thief River Falls, as industrial properties typically have heavy industrial infrastructure, which is expensive to build out. However, the local planning commission recognized that the current zoning limited the potential use of the property. Scott was able to make a compelling case for rezoning the property based on the existing infrastructure, the property’s potential value, and the commercial corridor along Highway 32. The planning commission approved rezoning the property, thus opening up more possibilities for its use.
Overall, the process involved strategic negotiation, securing financing, and navigating the rezoning process to align with the speaker’s business plans.
Financing strategies and perceived benefits of these strategies
Scott has employed several strategies to finance property acquisitions throughout his entrepreneurial journey, including leveraging contract for deed arrangements and securing bank financing.
“One neat little trick I’ve found,” Scott said, “is buying a house at a lower price on contract for deed, obtaining a higher valuation, and then securing a mortgage based on the higher appraisal value.”
Using this strategy has allowed Scott to obtain cash back on some of the properties he has purchased and maximize his investment.
“It looked like there was a good spread in the market and lots of upside with the ODC property,” he said. His entrepreneurial mind made him ask, “how do I cash in on this now?”
Acquiring the ODC property involved negotiation on the purchase price and securing financing through a combination of bank financing and equity from his home.
The perceived benefits of these strategies included the ability to acquire properties with minimal cash down, obtain cash back, and build equity. By utilizing contract for deed arrangements and negotiating favorable purchase prices, Scott has been able to optimize his investments and potentially improve cash flow through refinancing at lower interest rates in the future. These strategies have enabled him to navigate the financial aspects of property acquisitions and leverage various financing options to achieve his investment goals.
Plans for utilizing the space in the new building and potential opportunities or challenges associated with the property
Scott is exploring various opportunities for commercial development of the ODC property. The property, which spans 22,000 square feet and sits on nine acres along Highway 32, presents an abundance of opportunities for commercial use.
“Possibilities I’m considering include spinning off a portion of the property for a convenience store, or possibly even building a strip mall on the front of the property,” Scott said.
He might also consider selling off a portion of the land.
On the flip side, there are a few challenges associated with the property, including the need for significant cosmetic improvements due to neglect and the high interest rates associated with financing the property. Scott noted that it’s never just the purchase price that needs to be considered when acquiring a property. “There’s always cosmetic improvements, things like a new furnace, lighting and everything like that. You’ve got to have cash to do that.”
The other potential challenge exists on the back side of the property. Originally used as a dump site, the area was redeveloped into a park, but Scott is uncertain what lies underneath the soil and what the costs might be to redevelop that area for commercial use.
Hats off to an entrepreneur who is willing to take a calculated risk and invest in redevelopment of this great property in Thief River Falls.
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