I am liking at a group of 6 buildings for sale by one owner, I have a family member that is interested in purchasing a building or two and I am interested in the rest. The vacancy rate is 50% due to an out of town landlord and local laws getting tighter.
My uncle will be able to pay cash for his purchase but I do not have a down payment, any suggestions on how to present this purchase to the bank or to my uncle? The total list price is 345k and it has been on the market for over 1 year.
What is your thoughts?
Have you considered possibly doing seller financing or bringing in another investor to help with the downpayment?
Bank likely will not be interested due to the high vacancy rate.
Your uncle sounds like your best bet.
You might want to check into what local laws were hindering this out of state landlord as well.
First, the bank is unlikely to lend you money in this case for a couple reasons. Even an actual commercial banker (a banker that might give you a package deal, or finance all this investment property into one loan) is going to want 20% down and six months PITIA in reserve, which it sounds like you don't have. The nail in the coffin is the 50% vacancy. Unless you pay less than 50% of the appraised value for the property, a bank isn't going to touch it. It's difficult enough to get them excited about scenarios with 100% occupancy unless you already have an incredible relationship with them.
Second, if your uncle can possibly help you get creative, that would be a good route. Perhaps you and your uncle could join forces to come up with a seller finance option that gets you both what you want.
@Michael Noto is correct, you want to check the laws in the area and see what was hindering the landlord, you don't want to be in the same boat as him once you purchase. What kind of buildings are these, you said they are 6, are they residential? Can you split the sale into a duplex and fourplex? It might be easier to qualify for fourplex investment instead of commercial because they don't look at the vacancy rate as much. Just a thought. I hope you keep us posted, would love to know how this deal ends. Good luck!
I think the biggest issue is the property manager, he won't respond to the realtor to show the properties.... He looses his job if they sell. They aren't in good enough shape to pick the best building to buy and there are too many unanswered questions..... the big time lawyer owner won't release any information.
Thank you all for your time and information!
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