All Forum Posts by: Igor Messano

Our main concern is how lender will be valuing the property. We have the opportunity to acquire the asset without lending at a cheaper price and then refinance but we need to understand what the lender will likely lend on prior so we can estimate our final cash investment.

The actual value of the property we are comfortable with as the current lease rent is significantly below market but the real value is in the lot. We can work with the shop to relocate eventually as the lot size and zoning would allow for the development of 2 commercial retail and 7 apartments in the future.

If the property can be appraised by land value by the bank rather than the NNN lease value, but the DSCR is low, would a lender consider lending above the required DSCR if we could show significant ability to cover the payments through income? We are talking about maybe $500 per month where the NOI would be short of a 1.25 DSCR so not a huge amount of money.

Hi everyone,

I am working on my first commercial property. I plan on buying it with equity I have in other properties (Heloc) and later refinance to get the my capital out. I am trying to estimate what the property will appraise for when I refinance using the income method as it has 6 years left in a NNN lease.

I have the Cap rate for the area. Can anyone tell me what appraisers take into consideration in calculating the NOI of the property? The lease states the tenant is responsible for virtually everything besides structural maintenance. Since the developed part of the property is basically a "Barn" with un-insulated walls and a roof I am assuming this portion should be minimal (The property is a tire shop with a small drive in portion non heated). Anything else I should consider in calculating NOI in this property?

Main concern is making sure my expected appraisal will not be too far off.

Thanks in advanced!

Hi everyone,

I will be possibly be acquiring a commercial property in a triple (large) parcel in Philadelphia. The property is currently under a NNN lease which has a good amount of time left. While the investment is decent with the current lease structure, the upside would be future development in 2-4 years. The area that this is in is rapidly appreciating with 300-400k SFH selling blocks away and great rental area.

With a mixed use commercial zoning, what are some rough estimates to build a 7-8 apartment units with 2 commercial fronts in Phila? I dont need exact numbers but trying to get an understanding of rough estimates for some back of the napkin understanding. Does 50k/unit sound reasonable building from the ground up? I already have costs to remove the current structure.

Any knowledge share would be really appreciated!

The area is good and relatively stable from a rental income perspective but also small appreciation outside of big market swings which affect the entire city. But looking at your numbers I dont see how that can possibly be a good deal.

1) anywhere near 300k in the NE area sounds incredibly over priced.
2) You describe a total return of $1900 with your rent savings on a 300k house. That is terrible.
3) If you were to rent this out completely you are prob looking at 2200-2300 total in rent. Still pretty bad.

Some areas in Philly simply do not make great rentals because the average cost of the property is too high for the rent potential. Majority of the NE Philly is like this so for starting out I would look for an area with a bit better rent to purchase price ratios.

Not sure if this is what you mean by "found a zoning permit" bu within atlas you can see scanned copies of approved zoning variances. When these variances get approved they do not change the zoning of the property but the approved variance document is your legal document asserting the property is being used legally. This is very common in Philly and as long as you have that variance approval as proof you should be fine but best thing to do is get something in writing from the city showing the property is legally a 2 family dwelling.

@Emily Hill

Rolling the down payment into the loan is having the bank 100% finance meaning no down payment. Not sure I follow.

On borrowing the funds, this is not allowed for what sounds like traditional financing given the low down payment. Your only option is buying the property with another person who would have the down payment if you are to continue down the same lending path. Did something change that suddenly you need the down payment? What was the original plan?

I am in the process of purchasing a property that has no window or ceiling vent in the bathroom. Does anyone have any experience in having a vent installed? The bathroom has an external wall that is brick with siding over it which I am guessing would have to be drilled to place the vent out. This is on the first floor of a 3 story building so no access to do this through the attic.

Good news is this bathroom will be going through a full remodel so not worried about cutting dry wall but would like to keep the moisture away going forward.

All of our leases state that damages such as broken windows, doors, etc. regardless if accidental or vandalism, it's the responsibility of the tenant while the tenant has property under legal control. If you lease does not have such clause then ask for a police report prior to fixing. Although at the end, with police report or not, you will likely still need to fix it timely.

If you have to switch into 4 furnace's, add electrical panels to support them, and potentially alter the duct system so that each unit is being heated by each furnace then why not simply get the new electric panels and run wiring to the units for electric heat? This is usually the ideal option for rentals from a liability standpoint and often less work than re-configuring duct work.

Keep in mind that spiral staircases are very inconvenient. If the bedrooms are all on the 3rd floor, likely your tenants will not be able to bring almost any furniture upstairs. Have you ever tried to bring a dresser, bed frame, couch, or anything bigger than a small nightstand up a spiral staircase?

I've lived in a property with one for the loft and everything had to be brought up through the open loft "windows" as nothing could fit up the stairs.