Second Deal, 8 Unit Multi Family w/ Commercial Space

14 Replies

Starting a new deal diary starting with getting this property under contract.  I've been sending out letters the last 6 months here and there to some highly targeted areas.  I use a local woman that writes them, signs, and ships them.  She also takes the calls and updates me via spreadsheet.  However Everyones asking price was way too high and they wouldn't negotiate.  I made a call to someone who answered one of my latest letters.  They were interested in selling everything they had, so I did some research with the addresses the owner gave me.  I found one I was really interested in and after talking with the owner via phone it just so happens that my property manager is his property manager.  

We agreed on $200k for the property without me even seeing it.  Reason being the current owner told me he is heading to jail for a couple years and we can do the deal via mail and his attorney or we can do a contract now with the stipulation of getting a mortgage and also my satisfactory walk through.  My walkthrough is on Tuesday with my/his property manager.

The building is as follows:

Four 3br/1BA Apartments

Three 2br/1BA Apartments

One 1br/1BA Apartments

One Commercial Space

9 Total Units

Currently only 3 apartments are filled as the state program that is placing tenants had some issues with the current owner.  The change in ownership will push them to start placing tenants again. If they do not for some absurd reason (legit waiting lists for apartments in this area), we will be requesting to be removed from the program as they are not fulfilling their obligation if we're fulfilling ours (offering clean and safe housing).  I'll be posting a lot of pictures Tuesday after I see the place and confirm we're going to move forward.  I'm pretty positive I am, my property manager knows my expectations and told me it needs about $5-10k in work to get it all the way to my standards.

I plan on possibly bringing in a funding partner for the down payment and closing costs.  I want to buy a couple buildings this year and don't want to use all my available cash. I'm willing to give up some equity since the numbers are so great on this deal.  I'll post those with the photos as well.

Good for Cody 

I cold call a lot of multifamilys.  I just purchased a 15 unit that way.  I started hand writing a bunch of multiple to do a mailer. I will you success and hope to hear why he is going to jail.  

@Cody DeLong Congrats on the deal. I'd be interested in hearing more on the numbers - what you think rents will be, what ARV will be after you reposition, etc.

200k for 9 units sounds pretty cheap!  How rough is it?  Pictures?

Best of luck, will be following.

@Sam B. Getting pictures Tuesday. From what I’ve been told it’s not rough really. It needs to meet standards for the program it’s in so it cannot be a **** hole. Plus the current owner put over $20k into it in the last year to make it up to par with what’s needed.

I won’t be giving out why he went to jail. Not my place to say and I don’t think the reasons affect the deal at all

UPDATE!!  Saw the place yesterday and it was great.  Commercial space is huge and could be two different spaces easily. Needs $20k in work to get it up to my standards, update bathrooms, flooring, a couple kitchens, paint the common hallway, and finish up the commercial spaces for rent.

My property manager has a lot of units up in Rumford and a whole team, but no office.  They have offices in another city they are based. So we're talking about them occupying half of it thats already built out into offices if this goes through and doing the other half as a laundromat. I can have the management company deal with that for a % and they'll be right next door. There isn't a laundromat anywhere locally besides the next town over, but almost every home within a 5-10 block radius are multi families.  Even if apartments have them, many people probably see them filled a ton and want to go somewhere else.  

So we can bring some life back to this block and all win.  I will post photos tomorrow

Need to post photos soon. Submitted for the loan and figuring out my partner situation. Looking to get $20k to help with the down payment. I'd like to preserve some cash for future purchases this year. I'm waiting for an answer from my first choice investor next week. If he's game then we'll get the LLC made and start with that.

I’ve determined my goal with this building is to reinvest cash flow into more rentals in the town.

Congrats on the deal @Cody DeLong .  Sounds like it could be a promising opportunity, particularly if you're able to lease out a portion of the commercial space to your property manager.  The Seller's need for liquidating is definitely unique - great find! 

Well update time... the property appraised for $100k less then asking due to no comps and high vacancy currently due to the issue with the state.  Currently working on negotiating owner financing in order to let it stabilize and then get commercial financing.  Will update beyond that once I have more info.

Originally posted by @Cody DeLong :

Well update time... the property appraised for $100k less then asking due to no comps and high vacancy currently due to the issue with the state.  Currently working on negotiating owner financing in order to let it stabilize and then get commercial financing.  Will update beyond that once I have more info.

Any update?

 

@Sam L. deal is dead in the water currently. The owner is in jail and even though he is making mother every month still does not want to do owner financing unless it’s 50 percent of the asking price. At this point I’m not sure what more I can do. I do still talk with them and plan on visiting later this summer. 

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