Does this sound like a good deal(Off market triplex) ?

16 Replies

I found a distressed tri-plex in Zion Il with a motivated seller. The after repair value is around 190k and seller willing to sell to me for 90k as long as it is a quick and easy sell "without the bank". I'm assuming he wants a cash sale but I believe a hard money lender could help me acquire this property. The estimated repairs are $40k. I don't have any experience I just been reading Real Estate books but this deal fits the 70% - rehab cost rule. 

How can I find financing for this property and be able to do a fast close? 

if your assumptions are valid and it's a legal triplex, looks like a deal to me. also, is it vacant or can you get it vacant? it impacts your timeline to refinance on when you can rehab and rent at market value.

There are probably 100 factors that can tell whether or not the deal is good and if you don't have the proper experience and expertise your thinking and calculations may be totally wrong. Maybe, the ARV is not really $190k. Post some information showing how you confirmed the ARV is $190k. How accurate are you in regards to your estimate of $40k for rehab. It is an expectation that the cost for many projects ends up double the estimates. How long will it take to complete the rebab and double the time and cost for insurance and utilities because almost no contractors complete jobs when they say they will and you there is always b.s. excuses plus dealing with building inspectors and if you go without permits there is a chance you will get caught.

Attached, is a breakdown with a guess for your numbers. Post the numbers you project and I will do re-post it.

Jack nailed it. Be 100% sure in your numbers, then when you're sure, try and prove yourself wrong. Messing up either the ARV or the repair cost can be the nail in the coffin.

Why is the owner so interested in selling? What does he know that you don't? Why doesn't he just take it to market? Be critical of your deal and make sure to take off your rose colored glasses. 

And because I didn't answer your question, to find money you may look towards a hard money loan, theyre pricy, but price that into your numbers.
Assuming you don't have your own money you may still be able to get a portfolio loan on it, assuming fanny/freddie won't touch this property.
Print your numbers out and go talk to banks, more than 2. If they say the can't do it ask them who can, or what you can change to make it work.

@Jack Orthman I got the ARV looking at other multi family that have sold in the area. A similar triplex in the same neighborhood sold for 210k I just used 190k to be safe. Two of three units are already rented out. The first unit the owner had the plumbing and electrical updated but the whole unit needs to be finished. Drywall, flooring, kitchen, bathroom etc. I've talked to a few contractors on BP and they estimate to finish the first unit 35k-45k. He's an older gentleman and having health issues. Doesn't have the motivation to finish it. He lives across the street and has the triplex paid off and rents it out to son in law.

Originally posted by @Angel Moreno :

@Jack Orthman I got the ARV looking at other multi family that have sold in the area. A similar triplex in the same neighborhood sold for 210k I just used 190k to be safe. Two of three units are already rented out. The first unit the owner had the plumbing and electrical updated but the whole unit needs to be finished. Drywall, flooring, kitchen, bathroom etc. I've talked to a few contractors on BP and they estimate to finish the first unit 35k-45k. He's an older gentleman and having health issues. Doesn't have the motivation to finish it. He lives across the street and has the triplex paid off and rents it out to son in law.

 Sorry!!! I didn't realize it was a triplex. That makes a big difference and may be great if the rental income is good. HOw much do the units rent for?

@Jack Orthman I believe the first unit would rent for $950. Second unit for $900. Third unit is a studio and is currently rented out for $450. Has a large 2 story garage that current owner rents out to a guy that works on cars for $150 a month currently . So I believe I can bring in $2400 gross rental income.

Originally posted by @Angel Moreno :

@Austin Fogt what do you mean by check his registration?

In my city rentals must be inspected and registered, not sure about yours. There are people who have sold a 4 bed, and the inspector comes in and says its only a 3 bed.