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