All Forum Posts by: Chris Seveney

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Here is a 10,000 foot view of a deal that was brought to me. All of the information pertaining to income and expenses needs to be verified. The homeowner wants to sell due to age and health issues as they were also self managing the properties.

Three buildings for a sale price of $165,000 in a northern region of the US

Ten units in total with rental income of $6,125

Expenses are high due to utilities (oil heating) by owner. 

The homeowner will owner finance and hold the second note on the property (20%) for five years (amortized over 5 years) at 4%. So basically there is no out of pocket.

After factoring in utilities, an 8% vacancy, 10% CAPEX, 10% repairs and 10% PM the cash flow is negative $150. The majority of this is due to the $600/monthly payment paying off the second loan and the other big nut is the utilities which are $1500 a month.

The buildings are also all over 80 years old.

Even though this is owner financed and no money in it, I am going back and forth if this ais a good deal because if you figure you want to get $100/key this would equate to $12,000 a year for five years  = $60,000. Subtract to that the 20% down I would have paid which is $33k and it returns a positve $27k.

Based on the owner finance scenario, I would have the $32k paid off minus the $150 I am paying per month which equates to $9,000 so a total of $23k to the good.

While I am not at where I would be with $100/door, it corresponds closer to $90/door.

Thoughts?

What if owner decides not to sell or house doesn't sell? Unless you provide some significant upside to the homeowner why would they do it ? Not trying to be a pessimist but I think you will find the legal aspects of it will turn off homeowners as those who sell as-is don't want to deal with the home anymore and just want it sold. Just my 2 cents

You could Always owner finance if there were FHA issues due to number of investor owned properties. Also check on the financial health of the condo. We just bought a condo from homepath for $25k and we plan to put $10k into it and rent it. It will have an ARV of $55k. While i see a lot of people frown upon condos, they do limit for capital expenditures As if you do your due diligence you can greatly reduce any capex or costs which are surprises

Please be aware that you may not be able to sell the property for more than 20% of price for first 90 days We bought a Fannie Mae home and that is a deed restriction

I have not heard of them. I am located in the area and know if good construction loan lenders if you need one

Connect with Sean richway - he can provide insight and offers blanket loans - may be able to help.

Amount you can borrow from a bank depends on many factors which not only include your credit score but your income and DTI. You need to be more specific on what you are trying to accomplish in order to get a better response

Are these recourse or non recourse loans ?

I have read several posts from investors who are in one part of the country buying rental (buy and hold) property in another state / area of the country. My question is how do they perform the due diligence to check out a property to determine if it is a worthwhile investment ? Do they travel to the area or have feet on ground to look into it ? Thanks