Vacant Apartment Let To Die
I met a guy in california who has a building that is 90 units vacant and full of homeless in okc and now he has a loan on it of 300000 and has no intention of repairing it. So he is selling this building to me for 799000. however it will take about 400000 to fix it and get it rented...I am buying it with only the closing cost up front. Is there anyone who will finance on this property since in less than 60 days I will be able to have at least 30% of the building ready for rent...I need help with hard money to loan for no more than 2 years. Thanks for all the help I can get
So long as you are OK with being a property mgr, I would refinance it to pull some cash out and rent it out. Use that refi money to get into the next one or two.
[addsig]
Ray has it right.
A paid off house is a real waste of leverage for an invester.
Do some research, find out how much rent you can get. Re-fi cashout a amount that will allow you to cashflow - taking into account all factors.
Lets do some basic math. Assume you house in worth 100K. Fully paid off with rent around 700/month, after taxes and insurance you pull 600/month. Equity building at say 10% - 10K/ year
Bottom line: 600/month and 10K yr
Get a good rate pull 60K out... put 30K down on two 100K props. Each cashflow at 300/month. Now you have 3 props worth 100K at 10% - 30K/yr equity
Bottom line: 900/month and 30K/ yr equity
You pick
The only reason I said that is I am new and you have been doing this a lot longer. I bet my wife would have more to say then yours though because mine starts with an X before the wife.
Thanks for the replies everybody. I have been a little confused because for the last couple of years I have had the mind set that any debt is bad and my goal has been to eliminate it all and build wealth by living below my means and living a frugal lifestyle. I am learning that this approach is very slow and frustrating. Recently I read the series of Rich Dad books which most everyone knows encourages people to use good debt as leverage. I am a newbie to real estate investing but I think the time to take the plunge is fast approaching.
I wrote an article on this, you might check it out
http://www.thecreativeinvestor.com/residential/modules.php?name=Articles&file=article&articleid=862
[addsig]
will have to get used to thst, thanks.
its fixed now
American Modern (AMIG), Diamond States, and Foremost are 3 that offer solid rehab insurance contracts.
If you do or did decide to put it on the contractors "builders risk" policy, make sure you (or your ownership entity) are named as Loss Payee and Additional Insured...