So good news today and at the same time extremely nerve racking. I just found out earlier that my offer of $285K on a 11 unit was accepted! The asking price was $350K so I was a little surprised they accepted it without even countering back. The seller was very motivated as she was going through health problems and could no longer keep up with the property.
In all honesty it looks like she hasn't keep up with it for years. There seems to be a lot of deferred maintenance from just driving by and not doing to much of a in depth look.
My plan for this place would be to get in there get rid of non paying tenants or get rid of all tenants over time and fix up units as they become vacant with the plan to trying to change the tenant quality on the place. Right now it looks like -C tenants in a -B or B neighborhood.
According to the seller the property brings in an average of 700 a unit (I personally find that difficult to believe as this is sort of on the higher end for rent in the area for 2 bed 1 bath, I have requested the leases so we will see).
so my question to you guys what should I be looking for that is different to a residential purchase? Residential is my bread and butter, commercial is a whole other animal. I would like to know what experience you guys have had when dealing with these sort of properties. And any tips would be greatly appreciated.
I will add I have the 20% for the down payment I have been in contact with several banks two of which I am considering going with. One, a smaller local bank with decent terms then one a big bank (Wells Fargo) with great terms but unsure about them.
Look for leases, rent roll, bank statements for the past 6 month+, copies of utility bills, K-1's, any contracts on the property and any warranties. You will also want to walk through every single unit and hire an inspector to walk 3-5 units and the common areas. I would also bring with a contractor and property manager if you are using one. The inspection is just like a house, just larger.
How has this deal gone? What lender did you use? Did the property pass your inspection?
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