First time jumping in, need some help if I have an okay deal

3 Replies

I have found a package of 2 buildings with 11 units in College Station, TX and they are asking for $600,000. My estimated mortgage for this would be $2,862-$3100 from what I can tell with 0% down. I'm interested in living in one of the units, there are 2 open, and 9 not terminated. The monthly rent excluding the 2 open rooms is $5,750. However on the rent roll it says 2 are pending disposition and 1 has a status of "Draft" which I'm not sure what that means. All 3 say no on active, so excluding them its $3,800 a month. One of the pending dispositions last paid a month ago, while the other last paid 2 months ago. The "draft" paid 4 months ago. The total income of the building was $52,400 while their expenses were $30,600 with a net of $21,800 from 08/01/2018 to 07/09/2019.

Looking through the CAD property search, one property is worth $213,458 and the other is $230,028 bringing their assessed value at $443,486. Tax for 1 is $5,435.20 and 2 is $5,043.67 for a total of $10,478.87 property tax.

Thank you.

@Caden White . Congratulations on the find. 

By my calculations Monthly payment on a $600,000 loan, 5.00% Interest, 30 Year, will be P&I $3220.93, Taxes $873.24, and Insurance (estimated $500) for a Total Monthly Payment (PITI) of $4594.17.

Most likely, you will not be able to get a 30-Year fixed rate, Zero Down Loan, as this will probably be considered a Commercial Deal (more than 4 Units). Even if you Owner Occupied one of the units, my guess is the lender would only give you an Owner Occupant rate if that building was 4 units or less, and the remaining would be at commercial rates & terms. 5-7 year Balloon, 20 Year Amortization, Rates in the 6+% Range, etc. 

Good luck!

Great work getting all the numbers and doing thorough research. At first glance this could be a good deal, but there are other things to consider, like age of buildings, condition of units, appliances, what the leases cover or don’t cover etc. 

Your biggest hurdle is going to be financing, I recommend going to talk to a local bank ASAP.  I doubt anyone will give you $0 down, and like Jim said you’re looking at a commercial loan. 

Good luck!

@Caden White

If you're planning to live in one of the units, I would recommend getting a duplex to start. If you move into a unit, you can do 3.5% down with an FHA loan and it will be easy to handle while you get some experience under your belt. You're going to make mistakes, so it's better to make mistakes on a smaller property than a large one. Start small, then build into bigger properties. Frankly, it's going to be tough to get financing on a big property like that anyway because you'll need a large down payment.