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Neel Patel
  • Rental Property Investor
  • Hazel Green, AL
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52
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Need Help Access an Off Market Commercial Deal

Neel Patel
  • Rental Property Investor
  • Hazel Green, AL
Posted Feb 27 2024, 16:27

I have gotten an off-market Commercial Deal to me for $550K. The property consists of 3 front units touching the highway with good traffic. One residential unit is attached in the back, around 700 sqft. The total size of the building is around 4800 sqft. 

The seller is open to doing seller finance at 5% INTEREST only or P & I. The INTEREST-only payment would be $1460/m with a $200K downpayment. The loan will be due end of the 5th year. I am planning on holding this long term for appreciation. 

The seller has replaced the roof last year. All the expenses inside the building are the tenant's responsibility except for the apartment. I have the option to increase the rent on Unit 1, Unit 2, and Unit 4. They are month-to-month leases. I plan on putting CAM on the tenants.  The current rents are well below market rents. 

The location of this property is north of Huntsville. This is not located in the immediate appreciation area but it has the potential to appreciate in the longer run. 

Following is the income for all the units

RentsNew Rents Expenses
Unit 1: 1800 sqft $ 975.00 $ 1600Insurance $ 6,000.00

Unit 2: 1100 sqft

$ 900.00 $ 1100Taxes $ 2,728.00
Unit 3:  1100 sqft $ 925.00 $ 1050Sewer Charges $ 4,800.00
Unit 4(Apartment): 700 sqft
$ 700.00 $ 850Vacancy $ 4,000.00
Total $ 3,600.00 $ 4,600.00 Repairs $ 2,000.00
Yearly Revenue $ 43,200.00 $ 55,200.00 Total $ 19,528.00
Mortgage Interest Only/m$1,460.00$1,460.00
Mortgage Interest Only/y$17,520.00$17,520.00
Current Income Projected Income
Net Operating In $ 23,672.00 $ 35,672.00
Cap Rate4.30%6.49%
Cash Flow With Int Only $ 6,152.00 $ 18,152.00
Cash invested $200,000.00$200,000.00
COC3.08%9.08%

What are your thoughts on this deal? Anything I am missing? 

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