BiggerPockets

We came across this deal and we're not willing to pass it up. We weren't planning on going into commercial real estate this soon but here we are, trying to learn what we need to to get it done.

16 unit building/ bank owned 15 units currently occupied.
asking price 295k
average current rents 600-650/unit

My question is do any of you know of commercial lenders that do NOT require seasoning with your down payment?

Can you recommend any DPA lenders?

What are the requirements for obtaining a commercial loan?

Thanks!
Heather

Thanks Will,

I will gather my information and let you know. Tomorrow we are expecting some calls back to verify taxes, ins. utilities ect. I agree, it may not be a deal, we have a lot verification ahead of us. My "to good to pass up" was meant to imply we needed to do some further investigaton and not turn our heads on this one. The original numbers we were given seemed too good to be true. As far as looking into lenders, I want to know this information regardless. If this doesn't work out at least I'll have some knowledge on the subject.

Thanks for your time. I will post the numbers tomorrow.

Heather

Scott/Heather,

From your numbers, you have an excellent deal.
Be sure to verify if the tenants pay the utilities or if it is an all bills paid (by owner) Owner paid bills can dramatically increase your expense ratio.

What stae is the investment in?
$18,400 per door is not bad, so long as you don't have a large amount of defered maintenance. Do you have any idea of what repairs are needed?
Ar ethe rents at market or below?
With 15 of 16 units rented, you have a performing complex with no upside on occupancy improvements, but your acquisition price point looks good from the numbers you posted.

As far as getting creative, on a small purchase like this that is bank owned, your best bet is an all cash lower offer.
If you don't have the funds, you will need to look at partners, private investors, or put under contract and sell the contract.
Note: Banks usually do not allow assignment of contract, however, in commercial, with an all cash offer, they should not have a problem with it as your buyer needs to come with all cash, no financing contingencies as your contract states.

I may be interested if you don't have a cash partner and the deal is as you have stated.

Send me an email if you like and we can talk in more details and I can help you with the offer.

Received and responded.

You are welcome. Don't try and get the numbres to work, make sure they do work as they are or adjust your offer accordingly. Too many people play around with numbers until they fit and that is a recipe for disaster in the commercial world!

When you make your offer, start off with an LOI to get the price negotiations down. There are some very very important details and contingencies you want in your PSA.

There are many tricks sellers use to make the property look better and just as many protections available if you know how. I happen to know how!

Jesse,

There are a ton of tricks, too many to post here. A common one is to fill the units with unqualified tenants or even felons just to make the occupancy and the NOI higher. There is alos the trick of not performing any maintenance during the escrow period and the buyer winds up having to pay for extensive incompleted and ignored maintenance items.
You need to know all the tricks and have the proper contingencies for your protection as a buyer.