Increase The Income!
If you have any colleges around you could pay to furnish the place and rent it out for 20% more. If you are going to do this it needs to be well though out. Student rental operate differently and you need to go by the colleges semester start and end. But renting it out furnished will give an advantage of the rest of the market.
If not students, MEET with the local non for profits for mental health or battered women. They will rent the entire property from you at significantly more than market. Good Luck
[ Edited by nyideaman on Date 07/21/2009 ]
I wouldnt double down in your situation. I would focus on capital and financing improvements on my 13 existing units. Any appreciation today, you would get anyway, because you are an existing owner.
I will admit, that i purchased another unit this year, because of excellent financing, but im cash flow positive on 6 units.
good luck, (obviously, if you run into someone simply giving away their property, forget the above advice)
Cornell81 said "But how can this not be the low point after 3 years like this?" Simple. Supply and demand remain out of balance. Unless you can predict that buyers are coming into your local market or that inventory will fall, the potential remains for more distress in your market.
I gotta love the contrast between http://www.zillow.com and the current market. From http://www.realtor.com I picked the first property I saw from a meltdown zip code: 44112. Zillow says:
16033 Brewster Rd, Cleveland, OH
* Recently Sold: $123,334
* Zestimate: $169,000
* 4 Beds
* -- Baths
* -- sqft
* Sold On: 04/10/2007
http://www.realtor.com says what is currently for sale:
16033 Brewster East Cleveland, OH 44112
$1,500
4 Bed, 4 Bath | 2,168 Sq Ft on 0.21 Acres (9,148 Sq Ft Lot) | MLS ID #2504990
(Note this link may not work after this property sells... but it may work for a few years.
Like the others stated, you need to get that negative to be positive if at all possible. If you are paying utilities, see what you can do to make the expense lower. Perhaps split the water bills or separate metering of electric, water, heat etc.
Hope this helps you out a bit.
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Have The Cash Provided To Flip ALL Your REI Deals! REO, Short Sales, Commercial Property, Residential Property, RAW Land, Independant Living Facilities, Mobile Home Parks.
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[ Edited by ALLPropertyBuyers on Date 07/21/2009 ]
If you have any colleges around you could pay to furnish the place and rent it out for 20% more. If you are going to do this it needs to be well though out. Student rental operate differently and you need to go by the colleges semester start and end. But renting it out furnished will give an advantage of the rest of the market.
If not students, MEET with the local non for profits for mental health or battered women. They will rent the entire property from you at significantly more than market. Good Luck .
Splitting water meters is costly, complicated and fraught with inspection problems for not much ROI.
Next?
by the way there are many programs that you might want to look into. non for profits that provide housing for
Battered women
HIV Patients
Mentally Challenged
Affordable Senior Housing
International Refugees
the government subsidizes the programs and the non for profits manage the property. It is a relationship business but once its built is impossible to stop.
Why would seller carrryback require the AITD?
Is the 1st non-assumable?
Loon:
Did I understand you correctly? They gave you free carry back financing?
When I have seen commercial mortgages transferred, the bank made the new entity assume the loan.
Hi and thanks for the response. I am aware of assuming a commercial mortgage however what i am talking about is taking over the loan without involving the bank and jumping through their hoops. If there is a lot of equity i could do a seller 2nd.
Any experience anyone?
Thanks again,
Rosanna
If the title on the ownership of the property changes, the bank will pounce.
There is no DOS jail, but it is grounds for the bank to foreclose the mortgage.
cjmazur,
Since you seem versed on the DOS clause would you provide verifiable information on properties you know that the bank accelerated the DOS clause?
I have done over 500+ verifiable Subject To deals, including commercial properties without ever having a DOS clause exercised.
John $Cash$ Locke
[addsig]
NO.
They are invoking the DOS, to insure the TRUE owner of the property is on the hook.
Jay,
Thank you, saved me the time on that one.
John $Cash$ Locke
[addsig]
Commercial king,
Thanks for your post. My husband and myself have owned and managed multi families for over 5 years and we are not newbies. We simply want to expand on the number of units we own. We would prefer to purchase larger (6-12 units) buildings since it gives us better economies of scale. The 2 ways we can do this are basically through getting partners or some type of seller financing. As Jay says, we will be targeting motivated sellers where there is some type of upside. Given our experience we feel quite comfortable doing this. We are well aware of the work involved in managing apartments and are not dreaming of an easy lifestyle. What we are dreaming of is one where we are in control of our own lives and not at the whim of an employer. Eventually we would like to do what Jay says and that is to have a competent managment company take over but until then we will keep managing them ourselves.
Thanks for your input but we are not naively dreaming of easy street.
Rosanna
Yes, I do know that doing nothing is a decision.
Anyone else have any input on if interest rates go to 20%? -Tony[ Edited by tony17112acst on Date 06/25/2009 ]
Yes, my loan has about 4 years remaining on it and is fixed at 6.1%, amoritized for 25 years.
I am glad to see that someone agrees with the notion that if rates are high, inflation will allow me to continue to survive.
Do these commercial loans follow the prime rate mostly?
My loan is fixed for the next 4 years at 6.1%, then is a variable for the next 5 years, which is the 5-year treasury plus about 3%.
I feel like I need talked off the ledge. I am about to sell 2 of my 3 units, reducing my cashflow in order to get a 10 year fixed rate. By the end of 10 years, inflation should allow me to survive an 18% interest rate. So I would be giving up my sweet 6.1% rate with 4 years on it in favor of a 7.5% for 10 years. This is not easy to do since I will lose about $1000/month!! And I only make about $3000/month total income! -tony17112acst
[ Edited by tony17112acst on Date 06/27/2009 ][ Edited by tony17112acst on Date 06/27/2009 ]
Have you discussed the changing terms / extending the terms of your current loan?
I think that you are building an investment strategy around a scenario which is unlikely to occur.
Interest rates that high are likely to be the result of hyper inflation.
If we had that much inflation the value of the buildings would go up with the decline in the relative value of the currency-- so 5 years out prime goes to 20% but it has done so in response to 5 years of 10% compounded inflation so your $800,000 building (as an example) would now be worth almost $1.6 million. Even if you were forced to refinance at 20% (unlikely given the current structure of your debt) it would be the equivalent on a cash flow basis to a 10% rate on the current value of the building.
Do nothing. Review the situation in 2 or 3 years, begin shopping for another round of low interest 5 year money if you must then.
""I think that you are building an investment strategy around a scenario which is unlikely to occur.""
This is a true statement. You are basing your model on a very unrealistic number. This 20% number make analysing with silly results. 10% is your worst case scenerio in 5 yrs.
But u go to a variable rate, so you should be ok. i thought it was a ballon.
great thread
Do your best to get loans without balloons if at all possible.
Tony, I think you have made the best decision you can. You ultimately have to live with it, and it sounds to me like you will sleep easy, which is something many investors are not able to do lately.