All Forum Posts by: Jennifer Baldassari

Hello Bigger Pockets,

Would you please provide feedback analyzing our first "big" deal? We have 1 duplex and 3 SFH's however this is our first commercial and it's mixed use.

This is a downtown "main st"-type property in a vibrant small midwestern town consisting of two 2-story buildings built in the late 1800's.  

On the street level are 3 commercial tenants (restaurant, attorney, and pharmacy) - nice, newer, redone.  On the second level(s) are 10 apartments -  all constructed in 2007.  Essentially, all tenant locations are updated and newer, it is the buildings themselves that are old but have been maintained.  Due to the age of the building and the mixed tenancy; insurance came in at $10,307.00.  The primary risk we heard from several brokers is the restaurant under living quarters.  According to the broker, when or if the space no longer has a restaurant below apartments (which would be in our control), the risk lessens a bit and premiums could very well come down.  All tenant rents are below market by at least a couple hundred each.  So, there are concerns however also obvious upsides.  We are kind of stuck knowing which way to go.  Probably our main concern are the old buildings and cost of insurance plus any issues with an increase over time of insurance and property tax.  On the flip, having 13 tenants (and a variety of them) and occupancy rate at 80% with below market rent is a good place to be to lessen risk.

Here are our BP calculator results:

Purchase Price:  $360,000.00

Down Payment:  $45,000.00 (actually secured by another investment of ours)

Mortgage:  $2,590 at 6% over 20 years

Rents: $7525

5 year annualized return:  38.79%

CoC: 47%

NOI: $52,197.00

Pro Forma Cap:  14.50%

7% reserves for CapEx, 7% reserves for maintenance/repairs, 3% vacancy

Cash flow:  $2,157.00/mo

Cash flow at the 50% rule:  $1,570.00

I'm very excited to post this deal to the forums because I've read such awesome feedback on other posts.  We just received our insurance quote about an hour ago so I wanted to get on here and get some feedback from my people!  :)  Let me know if there is data missing to help come to a good assessment.  

Thank you!!!

Jennifer

Hi @John Warren,

We are downstate Illinois.  Would you mind sharing the insurance broker information with me too?

Thanks so much!

Thanks so much everyone!!

Thank you @Steve Vaughan.  I know very little about the whole SSN process apparently.  haha

Also, hello to East Wenatchee!  My husband and I lived there for awhile and loved it!!

We are placing our first tenant and used Avail.co to run the criminal, credit, etc checks.  Everything on this prospect's reports came back super positive.  The only questionable item is under the Credit Report there is one section that says "Fraud Indicators" and the indicator is Input SSN is not likely issued prior to June 2011.  The tenant does have credit (great credit) and of other positives.  If I had to guess, he was not born in the United States so that may be the reason for the indicator.  We have not asked him about it because I'm not sure if we should or can; however, my first stop was here at BP as I am sure everyone has run into this a time or two.  

Thank you for the feedback!

Hello!

We showing our first property to potential tenants.  Yay!  I have several different applicants (different families) that are interested in filling out the application and paying the fee of $55 (which covers background/criminal, credit, and eviction reports).  Should I have the applicants pay and process the background checks one at a time (one family at a time) or everyone interested as they come in? I hate to waste people's money if the first person in line checks out and rents the place (causing issue for other families paying the $55 per adult and waiting to find out if they are selected then discovering they are not getting the place).

I don't know if I'm asking that question correctly but I hope you catch my drift.

Thank you!

Jennifer

Hey BP!

I have a two-part question.  

Will (buyer or seller) real estate agents take seller finance offers to a seller? Or, are agents only working with, and for, buyers who are  “pre-qualified” with traditional lending? 

To piggy back on that, if agents won’t or don’t take the seller finance deal to the seller, what do you think about writing a letter to the seller and offering our deal privately (if we are not working with an agent).  

In my real life example, I have purchased a few income and one primary residential property utilizing seller finance so I’m familiar and love it.  A house that we want as primary just came back on market.   I would like to see if I can put together a good seller finance deal and present it to the seller.  I will go through the agent (buyer or seller) if they’ll actually present the offer (for one) and promote benefits of said offer but don’t want to get them involved if just a quick letter to the seller might get the deal done. 

Or anything else you might recommend? 

Thank you,

Jennifer 

We are purchasing properties from a family friend who had her rentals under the "care" of a horrific property manager.  The more I learn, the more I'm shocked to learn of what the PM has done/not done.  At any rate, is there a way to find out what other clients this property manager has so that we might contact them to see if they would like to sell??  I'd bet (just a guess) that some owners either don't know what's going on (?) or the property is so bad now they think no one will be it for more than two dollars or they are embarrassed (as our friend is/was) to make a move and let others see how terrible they were taken advantage of.  I'd love to unload these owners from this PM and their property nightmare(s).

@Matt Bishop  -  excellent points. We do intend to hire a great PM for this property and the next 3 this seller is unloading.  Glad I asked this question in the forum so that I could better prepare myself for what the current PM and owner are unloading!    Thank you truly for your helpful conversation.  @Bill B. ... security deposit.  Check.  Have that on my list.  Thank you.

@William Anderson  that is really good advice regarding having the seller go ahead and evict.  Actually, one side of the duplex is in eviction process.  Due out Aug 31st.  Which, is after the currently scheduled closing (which may be adjusted based on estoppel situation).  Got it on the deposits.

Thank you guys!!!  Truly appreciate all the help.