First Deal! Need Help, Appeciate It

I am currently going back and forth with a seller of 3-unit on the contract price. Here are the Specs.



3-Unit Property in Wilkes Barre, PA-remolded and vacant



Unit #1 is 2 bdrms, Unit #2 is 2 bdrms, Unit#3 is one bdrm. All utlitites are separate they would pay hot water, heat, electric.



I would only be responsible for mortgage, taxes, insurance, trash.



Income: estimates

Unit#1: $450-475

Unit#2: $400-425

Unit#3: $375-400



Min. total montly income= $1225



Asking: 84k

last neogiation 81.5k which includes 6% seller concession ( 4890). so I am actually offering 76,610.



Proposed loan 81500

106% owner occupied even thou I work/live 120 miles away at 8.75% interest only. I plan to refinance after 6 months for lower rate. Payments= $600



break down:

mininum income range:

1225

- 600-mortgage

- 100-taxes(annual is $1200)

- 50 -insurance(about $600 annual)

- 44 -trash(its 44 per quarter per unit)



=$431 net per month?



Any advice I would highly appeciate. First deal and it keeps me up at night. I am done to the last yes in the neogiation table. if anyone is familiar with this market area indicate it in your message, thanks

Comments(3)

  • donanddenise10th February, 2007

    Can you afford for any of the units to be vacant? They most likely will at some point. The numbers seem fine. If the numbers work for your situation then do it. If you can get more seller concessions, by all means try, if not the numbers must work for you.
    [addsig]

  • josenunez_112th February, 2007

    would a management company make sense?

    I am thinking I am going to lock this into a contract. I have 2 weeks for the inspection to be to my satisfaction in that time I will visit the property with a property manager that my friend uses.

    he can tell me about how much and how fast the units can get rented. company charges %10 of gross rents.

    what you think?

    if I hear the worst I can back out blame it on the inspection report ($500 lost, get my 1k deposit back), if all is well-- one step closer to my goal, and the deal continues.

    opinons?

  • rglover54812th February, 2007

    Based on your numbers, your price is very good. Anyone who runs cap rate or debt ratio for you will like what they get. The most important thing is that you are correct on those rent estimates and the time it usually takes to fill rentals in this area. If you can get close to $400/mo for these rentals, you have an excellent deal.

    Hell I have a 100k property that i cant even get $1100/mo. You only paying 84k.

    I think you should skip the PM and manage the first one yourself. I would be in there replacing faucets and changing out ceiling fans. Get used to showing the place and smooth talking renters that you like. Why let the PM have all the fun. Besides a PM may rip you off, so check them out. But one good thing, if a PM says they will take your place, then you have a good deal, they usually stay away from trouble properties. Good luck

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