Off Market Duplex/Triplex Combo - How to Proceed
Hey guys,
Over the past week, I've been going back and forth with an Owner I found through my Direct Mail Campaign.
He's an older, retired guy and it seems like Landlording is taking a toll on him. He told me he's 75 and sounded very grumpy. Today he said he was going to court with a tenant and starting the eviction process. It's no surprise he responded to my letter!
He owns a Duplex and Triplex right next to each other. Their taxes are separated by the city, but total it is 5 units.
He's owned these properties since 2009, purchasing them both for a total of $67k.
He refuses to name the price he's looking for. Not even a ball park. He wants me to make the first move.
ARV is a conservative 230k if sold individually, but unsure together because there are not any other 5 unit sales in the area to go off of.
All the units are rented out right now for $3845/m. Landlord pays Water for all units + Gas/Electric for the Triplex (roughly $580/m just in utilities).
He's owned the property for 10 years and claims to have kept it up to date, but I won't be able to get inside without him accepting my offer.
I've only done residential up until this point, but I'm curious if this would qualify as a commercial deal?
I talked to my Mortgage Broker and he said they could break it up into 2 residential loans, but then we will be paying closing costs twice.
The seller made it clear he wants to sell both together & I would want to buy both, but I'm unsure if I should seek a Commercial Loan for this or a Residential.
I'm also unsure what offer to propose to the seller without offending him and telling me to kick rocks, but I also need to give myself enough cushion incase it needs a lot more work on the inside than what he's telling me.
I feel like if I offer 150k and find out it needs more repairs, it will be much more difficult to talk him down. At the same time I think 120k would be borderline insulting since other Triplexes in the area have sold for 120k+ (although I'm not sure if he's aware of comps).
Thanks in Advance for any responses!