Home Business Business Attorney Eric Guster Sells Vacant Building for $4.25M, Shares Advice on Investing

Attorney Eric Guster Sells Vacant Building for $4.25M, Shares Advice on Investing

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Birmingham attorney Eric Guster. (Amarr Croskey, For The Birmingham Times)
By Ryan Michaels
The Birmingham Times

Eric Guster, a local attorney and real estate investor, remembers when he used to pull out of the garage of his live-work space on 4th Avenue North in downtown Birmingham and pass a piece of property not far from where he was located.

“I was looking at this building every day when I pulled out of my garage like, ‘Man, I want that building,’” Guster said.

That property, the Red Cross Building, which served as a local headquarters for the organization from 1975 until 1998, was one of the largest vacant buildings in downtown Birmingham.

In 2015, Guster finally decided to buy it for $850,000 and was told he was out of his mind.

“I was told I was stupid,” he recalled. “I was told by a banker, pretty much, ‘You’re an idiot,’ but I had the vision that somebody is going to buy this from me one day,” Guster said. “I saw what was about to happen with Pizitz.”

And Guster was correct. Just two years later, the Pizitz Food Hall opened on 2nd Avenue North and a number of revitalization efforts were coming to downtown.

By August of 2020, Guster’s bet paid off when he was offered $4.25 million for the building by Ed Ticheli, the developer of the the American Life Building, which will be a 137-unit apartment building located on the corner opposite the Red Cross Building.

This month, Guster’s sale of the building finally went through, a lesson of why to invest in real estate, he said.

“Multiple people offered me $2 million, $2.5 million [for the property], said, ‘That’s all I’m gonna give you.’ I said, ‘Well, that’s fine,’” Guster said, “’I can hold this property until everything around me is [bought]’…

Owning land is a way of giving a family generational wealth building renting and leasing it for the rest of their lives, plus multiple generations, Guster said. “They can use that property to borrow money to do other things, like send children to college…”

Guster’s Advice

To make money off the future value of land, Guster recommends buying in areas a bit before they’re booming like what he did with the Red Cross building.

“What I try to do with my purchases, is buy things in places that are going to pop, that are going to do well, not what’s doing well right now because if an area is already doing well,” Guster said, “you’re already too late.”

It is important for people, especially those from disadvantaged groups, to “learn what they have,” said Guster.

“I’ve seen so many deals where people have sold their property for pennies on the dollar to major corporations [whose] job is to buy the property as cheap as they can. Their job is not to be fair.”

Property owners need someone who can honestly tell them the value of what they have, he said. Black people often get unfair deals, not only in residential property dealing but also in commercial property, he added. “A lot of Black people own property on the main strips, and as long as they’re paying their taxes, they still control it and they need to understand how they can leverage that to get enough money to leave for multiple generations to come,” he said.

There are any number of ways that people can leverage their property, particularly commercial property, to make more money, he said.  For example, land leases are a simple way to make a significant amount of passive income.

“If you have a great piece of property that corporations want, you can lease the dirt, which means you still own it . . . you get $2,500 a month for the rest of your life and still own whatever they built on it,” Guster said.

Before making any purchases the first steps to increasing one’s economic power is to get their credit in shape, which makes borrowing easier, and to spend less than they make.

“When you are living at the top of your means, you can’t afford anything…I see entrepreneurs who will make money, but it’s going out as fast as it comes in. The banks aren’t going to loan you anything because you owe everybody, especially for dumb stuff like vehicles and things like that,” he said.

Guster added that commercial real estate is not a get-rich-quick investment. “It’s a minimum five-to-eight year long term investment in most cases,” he said. “With the current ‘flip a house’ investment culture, some people think it’s a quick turn-around, when it’s far from that.

“When I bought the Red Cross Building, I had the equivalent of a mortgage for one of the nicest houses in Greystone, Mountain Brook, or Liberty Park except I wasn’t living in a huge house, but paying monthly payments, taxes, and insurance on a long-term investment,” he said. “It was worth it, but was not easy.”