New & Need Advice
I have not started my REI career yet but am seriously ready to get started. However I think I would like to start with Apartment complexes to have a good ongoing income coming in and because there are a couple forsale in my area. My problem is this... I have come accross a couple that appear to be a good deal as far as net income but not sure which way to go with financing.... would a sub to work with something like this ?
The financial specs are this
Asking Price is $4,395,000
Year: 2004
Scheduled Gross Income: $639,480
Vacancy: $34,140
Other Income: $43,200
Effective Gross Income: $648,540
Maintenance: $219,750
Taxes: $79,684
Insurance: $8,500
Total Expenses: $307,934
Net Operating Income: $340,606
they then list this option
Debt Type: Proposed
Loan Amount: $3,516,000
Interest Rate: 5.75%
Amortized Over: 30
Due In: 10
Annual Debt Service: $246,221
Loan Description:
Obtain new financing from current first mortgage holder at current market rates and terms or obtain financing elsewhere and pay sellers prepayment penalty (approximately $28,800)
Any suggestions ?
thx
Subto would work on any property that has existing fiancing in place. Do you even know what subto is?? You might want to read through old forums.
sub2 will work. the "big" question is will the seller go for it. in order for you to have a shot at it you need to find out if he is a motivated seller and more important if so why? then you will have somewhere to work from. example: his health is failing, then a residual income might be attractive therefore possible sub2........km
Thanks for your replys.... I have been reading the forums and have also read John Locke's sub to thats what I do manual. I was just wondering if approaching on sub2 would be the best approach.
Thanks again
With a commercial property it can be that there is no personal guarantees, etc. Hence the seller might be able to sell with the buyer taking over the existing financing and the seller being off the loan.
So, subject-to as normally discussed is mostly focused on smaller residential where the seller stays on the loan but comes off the title. In this deal the options are more varied so 'traditional' subject-to may be a bit of a red herring.
Solve the seller's problem and see what the building will support.
John
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