Going To View, Need Advice On Rehab Job - Please !

I think I found one, 6 plex, with re-mod potential to 8-9plex. currently vacant. $90k, neighborhood not all that bad really. could easily rent for $3-400 each. owner let it run down, need maybe $30k rehab without even visiting it, I can finance it, and support it during rehab, anything else I should consider? sounds like a deal on the surface. I think I might go take a closer look, what quesions should I bring up at viewing? Thanks, first time, ready to make first deal, in this for the long haul, want something that I can raise equity with, so I can get more and bigger buildings, so this would fit my goals. This is over 1hour from my house, I have a full time job, but some flexibility with it, thanks so much, Scott

Comments(9)

  • onarom18th February, 2005

    First does the property have a positive cash flow? What is the cap rate? If the loan is assumable that is a good start. If he wants to get out from under the property offer a small down payment and let the Seller take back a second mortgage (purchase money) loan. Terms 30yr Amort, 7 to 10 year balloon.

  • lava52826th February, 2005

    The property is in a very desirable area. It is a block from a University. It is easy to rent and there is a very low vacancy rate.

    I thought the income analysis was the basis for determining the purchase price of an income property.
    [addsig]

  • lava52826th February, 2005

    Thanks for the input everyone.

    I plan on talking to the appraiser today.

    I was thinking of having the seller carry-back 20% and tell him he can sell the note to someone else.

  • kls9th February, 2005

    Your appraiser should probably be using the "income capitilization" method of appraising the property. This takes into account the income generated by the property rather than just a comparable sales method. If the appraiser is unaware of the method, you need to find one who does.



    KLS

  • lava52829th February, 2005

    Will an appraiser favor the numbers of an income capitilization method or the comp method on a particular propery? For a particular reseaon?

    or

    Will the appraiser just average these numbers?
    [addsig]

  • lava52829th February, 2005

    Talked to the appraiser today. He said he could see it selling for $170,000 easy.

    I am going to put in a multiple offer:

    1) $153,000 All Cash

    2) Purchase at $165,000 and seller carry-back 20%

    3) Purchase at $161,000, $5,000 Down, Balance payable in installments, $9,000 in Repari credits


    Now, he mentioned freeing up his credit. How can I make latter to offers more appealing to suite his need?

    Thanks again for all the input.
    [addsig]

  • lava528217th February, 2005

    Made an offer for $175,000 and $ for repair credits.

    [addsig]

  • InActive_Account20th February, 2005

    I would be interested in how you came up with NOI of $18,030? Thats $1500 month over PITI, vacancy, expenses! Doing rough calculations you would need to have rents at $1000/unit to make this work.

    [ Edited by hoober on Date 02/20/2005 ]

  • NY-Rick26th February, 2005

    I am trying to find out if he will consider transferring the deed into my name in exchange for me taking over and paying the mortgage every month. I will offer to refinance and cash him out in, say, a year or 2. I think it would be expensive because of closing costs, interest rate, points, etc. My credit rating is around 620, and i just figure a commercial loan may be a little tougher to get. Maybe not though. The $1500 cash flow is after debt service payment and ALL expenses. As I said the property is in rough shape. And that may be another reason it may be difficult to finance. Should I consider taking another approach?

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