3 Family Purchase Analysis

[Leo F.]

I own over a dozen SFR in Nassau County LI. I have a very rare opportunity to purchase a legal 3 family unit in my area. This would be my 1st purchase of this type.

Purchase price $450k  Taxes $15k  Annual Gross RR $54k  Insurance $2k  Tenants pay All Utilities.

The building needs approx. $20k in sprucing up. Being a builder, this is very easy for me to do quickly. The building should be commanding a min. of $ $60k per year ARV.

I am contemplating putting down the req. 25% cash down $112k and take a conv 30 yr fixed loan at appox. 4.5%

I am considering as to not tie up the cash right now as I am in the middle of buying and selling 6 flip/rehabs to take a private money mortgage for 12 months.  If so, it would be for approx. $405k @ 8.5%. I would basically be a break even for the 1st year, but I could do a term / rate refinance for the mortgage amount on the 13 month.

Thoughts.....

[Joel Owens]

"I have a very rare opportunity to purchase a legal 3 family unit in my area."

This is the KEY.

You already have properties in the area. Sometimes investors are willing to take on less returns to add a quality asset to the overall portfolio. Then you get a blended return you are happy with and a quality portfolio. This is different from investors that are outside of the area and can't make the returns work for investing there.

Some families own blocks of commercial properties or a bunch of centers in an area. They hold for legacy and estate planning for long term. The cash throw off is a secondary component in the long view.

If you are stuck on the asset try to get the best price you can but not wait if many other buyers are wanting it because of no inventory for that asset type in your area.