Would like input on a 12 unit I am considering.
It has been awahile since I have called on any of you for your input, but I have come across a property that has struck my interest. I have included the link from the mls for you have the best description possible.
http://www.trendmls.com/MLS/Report/MemberListingReport.aspx
The situation is as follows. I now have 5 total rental buildings that for the most part seem to be working well. I finally have good cashflow and the units are in good shape and all is going well. Just re-fi them for 4.62% at 15yrs fixed via fannie/freddie money and I am happy with the results.
Now I am really thinking about making the leap into larger buildings for the long term. I cam across a fellow on the MLS who is selling his entire portfolio. There range from 3 unit buildings to 12 unit buildings. From doing the research he has owned them since 1997 and I called him direct and asked why he was selling them in this poor market. He clains he is 53yrs old, been in tbhe game long enough and would like to do other things. He is a real "Numbers" guy and seemed rather sharp. After some more research on this fellow, turns out he graduated from M.I.T. I guess that would explain his savy numbers ect.
Anyway, the concern I have is that I really don't have any exp with units more that 3. I never used commercial money, and I am worried that more commercial loans ballon in 5 years, which bothers me as I see hyper inflation in the future. I could be wrong, and maybe since I don't have the exp in this matter, I can't speak intelligently.
Now, I spoke with the realtor as well, as the owner directet me to speak with his realtor. (The place has been listed for a year now, so I would think it is not selling because the price is too high. I drove to the property today and looked it over as best I could . Spoke to some neighbors and it looks, from the outside that it could be alot nicer with some cosmetic improvements. I also noticed that the owner pays the heat, but the windows are old. I don't know why he wouldn't put replacement windows in with the price of heating a building like that.
The realtor told me that "IF" the owner felt confortable with me, that he may do a second mortgage to help with the down money. I have never done this before, but he mentioned that I buy the place, and the next day we do a second mortgage and the guy basically gives me back the down money. What if he changes his mind the next day?
Anyway, I am going to get the exact rent rolls for this building and ask for copies of the gas and water bills for the last 2 years along with the tax returns, which he agreed to show me this Saturday. Now the interesting thing is that the realtor in not so many words said that the building is priced fairly and they are not going to move on the price. I thought that was interesting since it has not sold in over a year. Now I have some other investor contacts that I would like to ask, but it seems like everytime I find something I like and ask their opinions they suggest I don't buy it, and next thing you know, they own it. (I am getting good at doing outer peoples homework.)
The nice thing about his building is the origial house is 6 units, the there was an addition that was built in 1986 that in also 6 units. I guess you are able to see that from the picture. There is plenty of parking and it is caddy corner from a nice school. The area is very decent and the school distric is what I am attracted to, as my kids go to this school, and there are not to many houses for sale in this area. Now, 6 miles down the road where I own some of my ghetto properties, everything is fro sale, and sorry to say, I would take a loss if I had to sell these now, but I don,t and didn't plan on it anytime soon.
Hopefully you will be able to see the link I attached and give me an opinion on how to put a price on this building. Thanks