
The value of a commercial property is the income it produces. This one will produce income, just not very quickly.
Last month, I told you about a commercial opportunity in Cameron. Putting a commercial deal together takes a lot of time and effort…not to mention money. I’ve seen an “exploratory committee” spend as much as $20-thousand on due diligence before deciding to abandon a deal.
Luckily, I haven’t had to spend that much money, mainly because I wasn’t going to spend on things like asbestos studies, inspections, architects, and so on until I was certain this was a viable deal. While I haven’t spent a lot of money, I have spent a lot of time—more than 150 hours of my time and a good chunk of other people’s time.
Time is money. There’s even a formula called the “time value of money.” While that formula means something else entirely, my time has value! Would you like to know the result of this investment?

More than half the US population lives alone. As those people age, they will need skilled, professional care givers.
Backstory
I thought this property could be adapted to be an assisted living facility or something similar. It turns out that would require a substantial renovation budget. The more research I did, the higher that renovation budget climbed.
But even with the costs growing by the minute, the property would still serve the community and, more importantly, cash flow after completion and lease up. According to my latest estimates, the break-even point is a little less than 60% occupied.
We’ve even figured out how to use parts of the property with little or no renovation! That would help us survive the short run until we can reap the long-term benefits.
The Competition
None of this was going on in a vacuum. I was aware that other people, including the county, were looking at the buildings. Some of them have the resources to do the project without syndication, the “commercial” word for raising capital from a group of investors. My friend County Judge Steve Young made the county’s option very public. He wrote in his weekly newsletter:
Relocation of County Offices: The Cameron Hospital building is vacant due to the closure of Little River. This is a 34,000 square foot facility that would be well suited to house all of the County employees that now occupy most of downtown Cameron. We have been in discussions with Citizens Bank, Classic Bank and the Buckholts Bank, who collectively own the [property] about a trade of some of the County downtown buildings for the hospital. I don’t know if this can be worked out, but if we could move, it would free up downtown for business and provide Milam County citizens with a “one stop” service facility for all of the services the County provides.
Opportunity Costs and Opportunities

Here’s a quick exercise to explain opportunity costs. Take a $20 bill and use it to buy lunch for yourself and a friend. (It may take more than one!) Now use that same $20 bill to Uber back to the office. Spoiler alert: it’s not happening!
Even though I have already spent considerable time and energy and more than a little money figuring out how to make money with the property, I am in favor of the county taking it over.
Why? For one thing, it is good for my community. And then there are “opportunity costs.”
As Paula Pant puts it, “You can afford anything, just not everything.” Whenever you make a decision (investment or otherwise), you also decide Not to use those resources for any other purposes.
In the case of turning the old hospital into a senior living facility, the opportunity costs are simple and compound. First, there’s the obvious cost, totaling now more than $3.5-million, money that can’t be spent on anything else—like say an apartment complex. Then those costs are compounded by deferring the income from the investment for a year or two. The same amount of capital can buy a small apartment complex that would produce income from the start.
I can see the value of the investment. I can see the value of deferring the income from the investment to support the property until it becomes even more valuable; not doing so would cause the plan to fail. And I can see why investors without an emotional stake in the project (like community) would seek returns elsewhere. Maybe even in one of those buildings the county vacates. When a door closes, a window opens…or something like that.
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