All Forum Posts by: Greg M.

Hey all,

 So I would like some quick feedback/review of a deal I have worked out, just to confirm it's a good buy and that I am not missing anything.  The property is in way upstate NY, a three unit fully rented, two 2 BR one 1 BR built in 1890.  The 2BR are $800 a month each and 1 BR $600 a month.  Total income is $2200 a month verified and I have other units a mile or so away which get the same. 

 My best estimate of valuation is about $80,000 based on comps in the area. I actually bought a 4 unit a mile away for $45,000 last year but that needed about 30K worth of work so I feel this is about right as this one is turn key with no repairs needed.

The seller financing deal - 

Sales price $63,500

Cash at close from me $5000

4 year note @ 4% for remainder ($58,500), monthly payment of $1000 with balloon at the end, no prepayment penalties.

Monthly projections

Income =     $2200

Expense=    $220 management

$220 CAPEX = No problems yet but "Unknown age" on the roof and owner has had property for 20 years

                     $480 Insurance/taxes = Total taxes for 2017 were $4982 on assessed value of $78000 plus $600 a year for insurance.

                     $220 Vacancy/minor repairs/maintenance

                    $220 a month for water/sewer/trash/landscape/snow (actual should be way less)

                     $1000 debt service

NET loss of $160 a month      

The cash flow is terrible of course, but that is mainly from the outsized taxes which was from what I can tell from tax records an extra school levy, total taxes for 2016 were  $2341 on same valuation. I want to confirm with the city of course but my actual taxes/insurance should be closer to $240 a month, leaving positive cash flow of $60 a month. Plus with the new sales price I should be able to bring the assessment down as well, leading to some additional savings on taxes there.

I have two possibilities for this property, the first being to get it refinanced by a bank ASAP to pay off the seller financing and bring the debt service down by about half.  I do not know if this is possible though on seller financing so I could use some advice there. And second is to take equity out of my other property and pay this off leaving me with that debt service which should be about half of this.

It is a good property, great price, good rents, but should I pass or move forward?

Hi all!

So I am looking for recommendations on a HML/Private lender who can do a 100% purchase price plus repairs up to around 75% ARV total. I haven't been able to find anyone on the marketplace with those terms, so maybe its just not possible? Any recommendations?

The deal:

List price: $225,000

Repairs (estimate) $40,000 - $50,000 - entirely cosmetic, new floors, landscaping, bathrooms, and kitchen etc.  Nothing serious structural or gut job needed.

ARV - $350,000 - based on a half dozen comps in the neighborhood from the last 12 months, all about the same sq. ft, age, and bed/baths.

I currently have 3 multifamily properties that cash flow well but I am using all that cash to conduct repairs/upgrades upgrades on them, so I have pretty limited cash at hand and don't want to attempt a LOC on them until they are complete in the next 3-4 months so I have no cash to put towards down payment. 

This would be my first flip, but I think I have found a good deal, and hopefully the money follows.  Any suggestions on a HML would be wonderful! Thank you. 

They said because they have to run it as a commercial loan because I already own 11 units. But I only have a mortgage on one building, this will be my second mortgage I have. Doesn't seem quite right does it?

Hello all,

So I think I've landed my first zero down situation, or pretty closely at least. The individual I purchased my first property from is selling another just down the road, the pro forma provided is as follows:

Rent Roll

Income & Expenses

I have confirmed all the expenses as far as taxes, insurance, and water go, and minus 10% management, 10% CAPEX, and increase the R&M to 10% its actual NOI should be around $16,000 before mortgage payment, estimated @ $500 a month leaving $10,000 a year in positive cash flow.

It was appraised less than three months ago for $117,000.  I asked and he agreed to provide a second note, with no lien on the property,  for the down payment if I agreed to pay the full appraisal amount.  He agreed to let me pay "whatever works" for me, I suggested around $200 a month and he agreed, leaving almost $7600 a year in cash flow.

So I have a practically zero down situation, that will put money in my pocket every month but I am stuck because the bank want lend to me. My DTI is 41%, my monthly W2 income is over $5000, my credit score is over 750 and I have $30,000 in cash and liquid funds, but still nothing. The bank wants 25% down, 6 months of reserves for all my properties (3), as well as $6000 for closing costs. They want to see nearly $60,000 in cash and liquid funds before they will give me a loan which seems a bit crazy to me.

Any suggestions?

I have heard that HML can provide proof of funds letters, should I reach out to them and see if they can provide one for me?

Hello all,

So I am looking to purchase my 4th property, a four-plex for $105,000.  The seller has agreed to carry up to 20% as a second note to cover the down payment, but I can not find a lender willing to go with that deal.  I have been through 4 banks, 2 credit unions, and 2 mortgage brokers now and none of them will allow the seller to carry. 

How can I make this first, no money down deal work?

Thanks for you help!

So $7200 / $27,000 =thats 26.6% ROI, which is pretty good i think. Is it common to see better? IS that too low?

Sorry i guess my numbers were confusing a bit, thats $600 a month in cash flow x 12= $7200 a year.

 Monthly income of $2000

-800 PITI

-200 PM

-200 Vacancy/Capex

-200 Reapirs/Maint/Capex

I'm adding the CApex in there not seperately mainly because there wont be any real vacancy, again not a single unit for a month in 7 years was vacant.

Hi all!

 I'm looking at a triplex on offer @ $135,000.  Rents for $2000 a month full occupied, and has not had a single vacancy in 7 years.  Literally not one month in 7 years. Tenants pay all electric, gas, water, and trash.

The building itself is 200 years old next year, but everything has been updated in the last 7 years, to include all big tickets such as roof, furnace, and electrical/plumbing.  

Taxes= $2500 a year

Insurance= Assume $800 a year (not sure, i have a 6 unit for $2200 a year but residential should be less right?)

10% for management = -200 (month)

10% for repairs/maintenance/CAPEX= -$200 (month)

10% for Vacancy/CAPEX= -$200 (month)

leaves $1400 a month for DSCR

full price - 20% Down +taxes + insurance @ 3.5%/30 years = $777 PITI (round up to $800)

leaves $600 a month cash flow.

This deal meets my criteria, so my goal now is to figure out how to have as little out of pocket here as possible.  What I'm thinking is offer full price by request 16% sellers concessions, 10% for closing costs + part of down payment, 6% for repairs/cap ex (new paint carpets etc)

Would this work?  Has anyone ever offered OVER asking price, so instead offer $145,000 maybe %20 sellers concession etc?

Again my goal is to try for as little out of pocket as possible on this, any creative ideas?

Hello all,

  I am looking to have my next deal as the seller holding the combined note on two multi properties of his.  My question is how would I manage the taxes and insurance?  My current property has it all rolled into one payment through a bank with a traditional loan.  For seller financing I am guessing I will have to set up a new escrow account to hold 1/12th the taxes every month and then pay when the bill comes, and pay the insurance monthly etc?  Seems a bit of a pain but is that the way to do it, or am I missing something?

Thank you!

Andreas,

  I am from Savannah, I cant tell you exactly the comps because I haven't been in town in a few years, but I can tell you that is in the ghetto.  It is slowly getting better, mainly thanks to SCAD, which should be your primary consumer if you get it fixed up well, young college students with daddys money are great.  A duplex in that area would most likely be in the 100K range, say 95-110 depending on its condition etc.  Also you have to be very careful in Savannah, it is the largest historical district in the USA, which places a great deal of regulations as far as renovating an historical property, and also jack up the price for an "historical" property.

Price and Anderson is not the best area, but if you plan to hold it for awhile it could be a good play, as long as the gentrification continues you could catch some good appreciation.