I am entering into an agreement to purchase a three flat building, with a finish basement. As part of the agreement, the seller is willing to give me $48,000 over a two year period in a leasing agreement.
What part of the financials need to be inspected? If you give me some information on what to look for, I can better determine if this is a good deal. What do you mean by the financials? Price tag is $385,000. At 71/2 percent interest loan over a 30 year period. I intend to hold this property long term. a $1,000 down payment. A four car brick garage. A brick 3flat with a finished basement apartment. The neighborhood is transitional. Directly across the street are new developments. I have three of the apartments already rented. The building itself in not new, however, it has been totally rehabbed. Everything in the building and in every apartment is new. What other information would be useful? And of course, the $48,000 lease option over two years.
the every 5 yr reset of the SBA loan is not my understanding of how it works.
from www.sba.gov:
7a Interest Rates
Interest rates are negotiated between the borrower and the lender but are subject to SBA maximums, which are pegged to the Prime Rate.
Interest rates may be fixed or variable. Fixed rate loans of $50,000 or more must not exceed Prime Plus 2.25 percent if the maturity is less than 7 years, and Prime Plus 2.75 percent if the maturity is 7 years or more.
For loans between $25,000 and $50.000, maximum rates must not exceed Prime Plus 3.25 percent if the maturity is less than 7 years, and Prime Plus 3.75 percent if the maturity is 7 years or more.
Try calling the We Buy Houses signs, network with those investors and chances are you will find one that is wholesaling deals. Since they already have the property under contract there is no other competition other than their other buyers which prob isnt as many as the people shopping the MLS. Also in Pennsylvania you can file a form with SEC and it gives you the legal right to advertise to private lenders. One form is for borrowing from acquaintances not family and it costs 500. The other lets you advertise to many other potential private investors and it cost about 1500.
Excuse me, but are you referring to SEC national laws or state securities laws of CA? In my home state of PA, I have not seen such a mandate. I will go to SECLAW website to confirm to investigate this further.
Quote:
On 2008-10-23 21:52, cjmazur wrote:
"Place an ad in the paper stating 12-16% ROI secured by real estate..."
FYI, this is a direct violation of SEC and CA state securities law..
What are they leasing... need the low down..
I am entering into an agreement to purchase a three flat building, with a finish basement. As part of the agreement, the seller is willing to give me $48,000 over a two year period in a leasing agreement.
what is the rent rate in the area?
Is it a gross or net lease?
Sounds like a purchase leaseback?
you have to look at the financials of it.
What part of the financials need to be inspected? If you give me some information on what to look for, I can better determine if this is a good deal. What do you mean by the financials? Price tag is $385,000. At 71/2 percent interest loan over a 30 year period. I intend to hold this property long term. a $1,000 down payment. A four car brick garage. A brick 3flat with a finished basement apartment. The neighborhood is transitional. Directly across the street are new developments. I have three of the apartments already rented. The building itself in not new, however, it has been totally rehabbed. Everything in the building and in every apartment is new. What other information would be useful? And of course, the $48,000 lease option over two years.
the every 5 yr reset of the SBA loan is not my understanding of how it works.
from www.sba.gov:
7a Interest Rates
Interest rates are negotiated between the borrower and the lender but are subject to SBA maximums, which are pegged to the Prime Rate.
Interest rates may be fixed or variable. Fixed rate loans of $50,000 or more must not exceed Prime Plus 2.25 percent if the maturity is less than 7 years, and Prime Plus 2.75 percent if the maturity is 7 years or more.
For loans between $25,000 and $50.000, maximum rates must not exceed Prime Plus 3.25 percent if the maturity is less than 7 years, and Prime Plus 3.75 percent if the maturity is 7 years or more.
Why not either find an individual investor to buy it and lease/purchase it to you?
The 40% of the deal that the SBA does is fixed for the 20 year amortization period.
The 50% of the deal that the bank does adjusts every 5 years of the loan.
Its a good program, if your banker thinks the SBA fees are too high then find another banker, somebody who specializes in 504 loans.
putting a large ernest money deposit impresses people, but then the $$ is tied up while they decide.
make the offer as clean as possible with well defined or no contingencies.
I like the idea of the bank providing financing.
If I was the bank I would take the cash off, over a higher price.
"Place an ad in the paper stating 12-16% ROI secured by real estate..."
FYI, this is a direct violation of SEC and CA state securities law..
Try calling the We Buy Houses signs, network with those investors and chances are you will find one that is wholesaling deals. Since they already have the property under contract there is no other competition other than their other buyers which prob isnt as many as the people shopping the MLS. Also in Pennsylvania you can file a form with SEC and it gives you the legal right to advertise to private lenders. One form is for borrowing from acquaintances not family and it costs 500. The other lets you advertise to many other potential private investors and it cost about 1500.
Excuse me, but are you referring to SEC national laws or state securities laws of CA? In my home state of PA, I have not seen such a mandate. I will go to SECLAW website to confirm to investigate this further.
Quote:
On 2008-10-23 21:52, cjmazur wrote:
"Place an ad in the paper stating 12-16% ROI secured by real estate..."
FYI, this is a direct violation of SEC and CA state securities law..
both State and Fed.
Here is the fed reference. I know the CA law exists and I bet it does in many other states.
This is the SEC ref:
http://www.sec.gov/investor/pubs/promise.htm
[ Edited by ekeisha on Date 11/11/2008 ]