Hi BP community,
I am interested in buying a fourplex, but the downpayment will be substantial. I am wondering if after buying the fourplex I would be able to sell one of the units (each of the units is the size of a small house), and use that to cover my initial downpayment, giving me the remaining 3 properties cashflowing every month without any tied up capital.
I imagine there are some issues doing this regarding the bank that owns the initial loan probably not wanting me to sell off a fourth of the asset while I'm still making payments (if they had to take the property back for foreclosure that would be messy). Just wanting to see if anyone has ever done this and what advice you may have.
I’d assume you’d have to convert the property into condos (wouldn’t be without it’s costs for legal fees, etc.) but then you could sell the units individually.
If it's zoned and platted as a true 4 unit, then no, you won't be able to.
You'd have to convert into condos which would likely be a huge undertaking and wouldn't fly. It can be done, but likely not worth the time/money.
Ug. That sounds like more trouble and expense than it's worth. First, your property is on 1 parcel. So, you would need to have it re-zoned and subdivided for each unit. Then you would probably need to establish an HOA to cover common elements like roof and building maintenance...and the grounds and streets and driveways. THEN, you need to have the property re-assessed for tax purposes. And don't forget the condo conversion process. A city inspector has to come out and tell you all of the things that need to be done in order to make these units stand alone. BTW, once you get a City inspector out there, EVERYTHING inside ALL of the units needs to be brought up to code.
If you haven't spent over what you would have just to put down your original money, I would be SHOCKED!
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