Hi everyone, I'm Josiah. I've long wanted to invest in property and not just own a house. My wife and I have "flipped" the three houses we have owned to pretty much scale up each home to what we have now for the five of us. We both have good jobs, I was raised with the do it yourselfer family and friends. Worked jobs from roofing to framing and concrete growing up. My current job is in industrial manufacturing and I have to take bids on jobs, award jobs, watch contractors, deal with hard bids, not to exceed bids, change orders ..... etc.....
We have started talking about our future, and looking at where we are headed. A out a year ago I started researching the real estate around my area. It's small town Iowa about 25k people. The last census had 3% apt vacancy rate. I've found a few deals on these store fronts with apartments above. Some have three some have four. One has a couple garage stalls.
What do some of you consider when looking at these?
For example, one of them is asking 40k.... it has 4 apartments above it and the avg apartment around here goes for 500 dollars. The quick math tells me I can cover the mortgage even with one Tennant......
What are your thoughts.
Thanks in advance!
I own one of these. It's a 4-plex with one of the units being a Convenience Store at the bottom. One thing you need to be aware of is the ONLY way for me to figure out financing was an FHA loan. The usual Fannie /Freddie loans wont lend to you unless you are actually running the store yourself. It's weird I know, but that's what I ran into. Obviously I wasn't taking over the store.
The loan / building was too small for a commercial loan so the only other way I could figure it out was an FHA.
So with the FHA loan that meant that I had to actually live in one of the units. That's where I am right now actually.
Also I had to deal with something called the Self Sufficiency Test which was super annoying. The test looks at what the rents are, and if they are too low, it makes the amount you have to put as a down payment go way up. I originally thought it was going be be great because it was an FHA and I was only going to have to put 3.5% down or something but, because of that test, I ended up having to put 30% down!
Just sharing some of my experiences. Yours is way cheaper than what mine was so you may be going the no finance route.
Feel free to ask me anything more.
Most of our small town banks in Iowa will do commercial loans for small amounts mine range from $12k-68k.