-Lease Option Deal For 6 Unit Apartment Building.-
There has been a building on the market for 5 months listed for 400000 which i have wanted to buy. THe price was too much since interest rates on commercial loans have come up. I had quotes of 9.5-11% (what is a good rate to get now?). The owners have said they are willing to let me lease the entire building. I have tenants who are ready to move in once I hold the lease on the building. So I are negotiating the details with them for a four year lease with good rent increases each year while still leaving a conservative profit for myself, with the option to purchase at the end of four years for their asking price of 400000. How could i structure this kind of deal? I have an LLC set up, should the lease be held there. How do I then sublease it? What sould I be careful of. Time is of the essense for this deal, I have a short time before my tenants find another place to live. Thanks
Definetly start with 1-4 units. Consider buying new construction homes. Right now the market is soft and builders in many areas are offering fantastic concessions just to move their product.
I just sold two of my duplexes and am buying 3 new construction homes below the builders cost! We are spending an average of $30,000 less than these homes were selling for in August and the builder is throwing in $6500 towards closing costs on top of it all. I am using a part of this to buy down the loan to a 5.5% interest only for 5 years.
They will cash flow better than my duplexes, I will have no maintenance, much better clientel to work with and a huge chunk of equity to start with.
Add to those advantages the simplicity of single family financing versus the rigors of commercial financing.
This is my second go-round with this type of investing and it has paid off handsomely.