4-Plex Review And Question
I'm wondering what the best way to go about this deal would be?
4-Plex in a nice town.
Asking price: $185,000
All 4 units rented
Rent: $475 p/month
Rent: $475 p/month
Rent: $465 p/month
Rent: $450 p/month
Owner said rents could be raised.
Laundry Facility: $60 p/month
Owner said machine prices should be raised.
Owner pays gas bill: $200 p/month winter
$50 p/month summer
Owner pays water/sewer: $200 total every 3 months
Tenants pay for their own electric.
This sounds like a good deal and the place looks nice.
I was interested to hear from others what they thought about this deal and how they would go about getting financing for this deal?
Thank you
Kellie 
You will want to know the market rents for the units so you can analyze how well this property will perform for you. If the owner thinks the rents can be raised, have him/her do it before you buy (that way he/she is the bad guy and not you).
It looks like a cash flowing property based upon what you have indicated, but you will want to verify the operating expenses (ask to see the financials on the building as well as the portion of their tax return that reflects this building - they will tend to over-inflate numbers when trying to sell, but under-inflate when dealing with Uncle Sam).
You should find out more about your seller and their motivation to sell. Maybe they would be agreeable to carrying back most of the purchase price with favorable terms (that will save you on loan fees).
Maybe, the seller would be agreeable to having you take the property subject to existing financing (check out the subject to board for tips on how to complete that type of transaction).
In the tools section of this website, you can run the numbers to see if the deal makes sense to you.
Regards,
Pearly
I am going to attempt to put some numbers together for a year.
total rent/yr = 22380
Laundry facility = 720
total coming in assuming no vacancy = 23100
Gas bill (with 6 month winter) = $1500***
Water/Sewer = $1200
Insurance = $
Taxes = $
Maintenance (building/lawn) = $
Trash Collection = $
Loan Payments = $
I know I am forgetting something but I am sure others will help out. One other thing that I want to be sure about is the Gas bill ***. Is that for the whole building or for each apartment? Also would like to know how each apartment is heated (electric/gas) just to help make sure that the information that you are getting from the current owner sounds legit. Just a few things to think about and help put it into perspective!!
I just spoke with the owner and she said they will only take convential loan. No seller financing and she wants 10% down.
So, if I can obtain a conventional loan for the remainder - what are my options for the 10% down?
I'm trying to use as little of my own money as possible.
Thanks,
Kellie :-?
If the seller isn;t providing any of the financing it is same as cash to them - they do no thave the right to tell you how much you need to put down. Second, sellers always say the rents can be raised - are they in the business of giving away money? if so ask for some for yourself! They are getting every dollar they think they can and minimize their problems. don't fall for it. If the want you to consider higher rents in your estimate of value, I wholeheartedly agree with the previous post - let them raise the rents!
What are the taxes?
Lastly, get a good mortgage broker to find you a loan to buy this place - they'll pull your credit and tell you what they can offer - usually 80 to 90% LTV; so you'll need to come up with some DP money - friends, family, or a local bank are possibilities.
then go back to the seller and start working on discounting the property - since it is a cash purchase, they might be more motivated - or maybe they'll offer to take a 10% second mortgage.
start with a mortgage broker that has done 4 units before - get their estimate fro loan costs, then add in the taxes -