Analysis Help With Deal & Creative Financing

[Dee Xixi]

I received a call from a realtor for a 4 units home that he has for sale. Yet to put it on mls. Asking price is 350k but the seller cant take no lower that 335k. I went to see the home with my contractor. We estimate rehab work will be between 120-150k. Assuming I buy the home for 335k and I do rehab for 150k that i s about 485k, which represents 85-90% market value. Keep in mind I will add an extra unit to make it a 5 unit which in return will be75% market value.
unit 1: 1100- unit 2 & 3: 850 ea - unit 4: 1200 and unit 5: 1350= 5350.
vacation rate: 6%
tax: 5700
insurance: 3600
The seller owe a HML on the home for 245k and i am guessing another 35k for realtor, points and closing cost which the owner realisticall owes roughly 280k.

Please help me structure creatively a wrap around or the financing. how much is right to offer the property. The pros and the cons on taking this project. Projected cash needed. or can I make the owner partner up with me.

my plan is to refinance and hold for at least 5 yrs.

Thanks

[Bill Gulley]

IMO, that's not a deal for you. Saying you don't have the cash means partnering or borrowing more. It's a major rehab and fire jobs are the worst ones, very dirty work and haul offs will cost you more as well as the ash makes a real mess.

You should be able to do much better than 6% as Jon pointed out, especially on 300K+

Also, going from 4 to 5 units might mean you will need to obtain a zoning variance as 4 plexes are a zoning category in multi family, usually 2 to 4 family then above. The lot would have to carry the additional unit as well as parking.

I'd look for something else, too much brain damage there.