hey all,

I am going to take a look at a 12 1 br apt building which comes with a 2 unit multi next door listed at $249,000. Parking in back (4 spaces). Its in an up and coming part of town which will see major growth 5-10 years from now. It also is 1 block from a small university. Currently the area is a bit shady.

Numbers: 12 1 br apt, Sep utit fully rented at $350 per. The 2 unit multi needs rehab and is vacant.

Annualized rental: $50400

Taxes: $6360

Insurance: guessing $4000

Operating expenses:$20440 (with reserves, maintence etch)

Noi: $29961

Debt service:$10488

Cashflow 19472---$1620 cashflow per month

I currently have a 3 unit that I owe 196k left on the loan but could sell for around $305k leaving me the money to 1031exchange for downppaymemt etch for the commercial loan and repairs

So do I sell my 7% cap $427 cashflow 3 unit in a nice area to risk on this?

Could you find a bank that would let you use the equity from your 3 unit to buy and do the work on the 12 unit?

@Bryan Erlanger  

Thanks for the reply.. are you saying heloc or heloan it? I don't think I would have enough dti to take on more mortgage debt.

How old is the property?

Could do either Heloc, heloan, or find  commercial banker(s) (not residential bankers) that basically secure the new loan with both properties. 

Assuming you have had your first property for awhile a banker should figure that income or cash flow into your dti calc somehow. In reality the 3 unit should help not hurt you. If not you should start looking for a new banker, in my opinion.  

I calculate the operating expenses to be closer to $26,000 including management and maintenance and vacancies.Even with that you are buying at about a 10% cap.  The two unit building is free.

Good Luck.

Bill