20 units need funding for????

Question

Hi,

Been on bigger pockets about 1 year and probably the 3rd time posting!

I'm looking at a 20 unit total Multifamily investment. Here's the kicker. It's not 1 building. It's a 6-plex fully rented all at $700, am 8-plex completely empty (needs about 8-10K per unit), a two triplexes fully rented at $700 each, so out of the 20 units 12 are rented and 8 need a full rehab which will rent for $750-$800 each.

Two questions:

1. Can I go with a traditional lender? Community or local bank? And if there's any private lenders here on this forum that would be interested in funding this deal?

2. How do I figure out what's it worth in its current condition and the ARV?

Goooo!

Jason Hirko · Answer

@Carlos Gutierrez

If they're all titled and platted separately, would the seller be willing to split up the contract into two contract, one with the properties producing income and then the other with the properties needing rehab? What I would want to do in that situation would be take the performing asset to the local bank, get a 6% interest loan with a 15-20 year amortization, and then go to private money/HML for the rehab project, then refinance it when it's producing.

Account Closed · Answer

Carlo

Our company does this type of funding. Give me a call, and I can give you a better idea of what we can do.

Kevin Yeats · Answer

If the 4 properties and individually titled, you will need a blanket loan or for separate individual loans.

Ola Dantis · Answer

@Carlos Gutierrez I think buying this Multi-Family unit property below the intrinsic value guarantees that the deal is solid

Carlos Gutierrez · Answer

@zack quick. Yes I walked the properties with A GC and he estimated $70-80K. For the 8 units.

@Nate Watkins the cap rate for this area is around 9%-10% it's a C class area with rents climbing through the roof. I'm trying to get it under $700K sales price. The economic vacancy I'm using is 15% including delinquency. The 12 units are all rented and have over 1 year leases and some have been tenants more than 4 years. I want to keep this in my portfolio because it's close to me and a cash cow VS. repositioning it for a profit.

@jason hirko, that's a great idea. That's why I love bigger pockets.

My thoughts are the value is in the long term hold, even if I have to deal with a full fledge rehab.

Your Thoughts are greatly appreciated!!!!

Nate Watkins · Answer

Depends on what local cap rates are at, and what local sales prices per unit are at. Reasonably (a 7-8% cap rate) you could expect a sales price in the mid 600k's to low 700k's based on current income. If you're sure you could be all in for less than 800k (after renovations), this looks like a solid deal. Just be very diligent in ensuring those rents are legit. A lot of times properties will be leased with X rental rates, but economic vacancy will be really high. This is the real vacancy, including delinquency.

Zach Quick · Answer

@Carlos Gutierrez Have you got it under contract already?

Have you walked with a GC for a quote on the 8 units that need rehabbed? Smaller, local bank will be your way to go after this one. I would present a little package to a few of them and see who bites, assuming your finances are in order I think you will get some interest.

Carlos Gutierrez · Answer

All 4 buildings on the same street.

Basic information, the 8 plex needs a full rehab.

All the other units have been updated in the last 5 years. Been rented successfully.

The 8 plex was let go down by a bad property manager, and the owner is older and does not want to do the rehab.

Sales price will be around $650,000-$700,000. Once all units are up and running my conservative ARV would be $950,000.

Let me know if you have any other questions?

Irving Allen · Answer

Are the properties close to each other?  What information has the seller provided?

Carlos Gutierrez · Answer

All 4 are individually titled. 4 tax maps

20 units need funding for????

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