New Investor-Seller Financing

8 Replies

@Shelly H.

Are there any value add opportunities? Could some units need fixing up, are some units renting below market rents, can you make your tenants pay for more expenses? These are some ways to increase cash flow.

@Shelly H. , my advice is to have plenty of reserves.  If it’s an appreciating area, rents should increase 3-5%+ annually.  In 5 years you will be ok as rents could be 20% higher than today.  Just figure out how you bridge to that time.  ;-)

Nick Rutkowski, units are in pretty good condition as they are. I don’t see much in improvements that could be done at this time. Some units may need increased, so this will help a little. 

Originally posted by @Shelly H. :

 Terms are 3% down, 5% interest, 30 year amortization. The properties are being sold 10% below market value. 

Sounds too good to be true.  How did you determine the market value?

 

If the cash flow is not there you need to be extremely diligent about making sure what kind of appreciation to except and like someone said above, see what value add you can do to force some of that appreciation and be able to justify rent increases. Appreciation is less capable of controlling than cash flow so make sure you are ok with prospect of the future cash flow as well.