$900,000 - $970,000 What Is A Good Deal?
I live in St. George, Utah. This is the first big real estate deal for me. I own my own business and I've always been a big believer in "thinking big" so I look for big opportunities. Well I've come across a investment that is TWO Large Fourplex units. As it stands now total rental income is $6,900. Each unit is avg. 1750 sq ft, 3 bed, 2 ba, and 1 den that could be a possible bedroom. Each unit also comes with a two car garage. I stumbled across this property before it even hit MLS listing. The real estate lady I was working with in looking at another property on suggested it to me.
Now here's the deal.. The lady who is selling it inherited the land and built these two big fourplexes, a total of 14,000 sq ft. on it. She's selling them for $970,000 and she's carrying a mortgage of $700,000. So she's asking a little over $69.00 a square foot. The units were built in the year 2,000. They are by a school and in a growing area.
I checked out some comps in the area. And one fourplex unit across the street that was built in 2003 sold for $95 a square foot. It doesn't come with a garage and I think the units are comparable in size. I couldn't understand HOW in the world it could sell for so much when I checked out other Fourplexes around the city area and they are selling for roughly $65 - $80 a square foot.
I'm entering into this deal for the first time. My mortgage guy has REALLY been able to hook me up with a great deal. On one of the fourplexes I can get owner financing with a 90 - 10% LTV with 4.75% interest. So I've got to come up with about $48k down. Which I can do. On the other fourplex they are asking 85 - 15% LTV with 6.5% interest. The lady says she wants to sell both fourlexes in one deal.
By doing this year I basically come out with a total mortgage of $5,500 a month, a rental income of $6,900 (from 7 units) and one place for myself to live in, and possibly rent out a few rooms to buddies.
I want to tie up both fourplexes but that means coming up with a down payment of $48 k on one, and a down payment of $75k on the other (which I'll have to get private investment for)
This could be a very nice deal with positive cash flow but I want to know if first of all this truly is a GOOD DEAL with regards to this much money down.. or if I can get these good deals somewhere else? I also wonder if I can turn around and flip the mortgage note.. or sell the property while its in escrow. I wonder what other options I have to make this a good deal.
Any and all help to answer these questions is appreciated.
The deal is doable. But forgive me, I would attempt to reduce my downpayment abit and if the interest is so low on one property, why not lower it on the second property?
If you had all your own funds very nice deal if this is where you choose to live and would be happy playing the part of the resident manager/owner.
In the community that you have described this is pretty much market. But I somehow or other get the feeling that sometime latter you will wish to move on perhaps even to areas where the trumpet of Moroni is not heard and the name Smith does not cause you to genuflect. This might tie your feet for a while. But if Pearls of Great Price is your idea of good literature and you are happy, sounds like a good deal.
Cheers, Lucius
Hi Lucious,
Thanks for the quick post. Yes I do see this as possibly being a long term investment tying me down. Is it also not possible to still manuever after I develop some equity in the property? I like St. George, but I like investing in lots of real estate even more. Considering the down payment will pretty much clear me out of my liquid capital, is this a good idea?