All Forum Posts by: Account Closed

There are alot of good responses so far, but reading your initial example I see two things to me that stick out as issues.  First, there is a risk that you don't get the promised return on the note fund.  But more importantly in order for you to borrow at a low rate and invest at a high rate - I would want my cashflow to work out positively.  Otherwise, you basically have an enforced savings plan.  And at the end of the term - 36 months, you are only walking away with 5-6K.  For three years of work I'd want more than that.  

If you want to do something it might be better to take the money you have and maybe offer private loans to others for rehabs.  This way you could set the terms and hopefully control risks a little better.  

@Whitney Sewell any updates?  

You are taking on alot of liability by doing this, and while the seller financing is attractive, there is the risk the seller is offering this b/c nobody with enough to put down is interested in the property.  

Few questions to ask yourself

Do I have enough money to do background and credit checks on these tenants?

Do I have enough to fund a major repair if something goes wrong? 

Do I have enough money/expertise/time to renovate the lower priced units when the leases are up? 

How am I going to create value on this project?  (either expenses go down, or income goes up, or better yet both)  When you eventually refinance into a commercial loan, you don't want to have to put up more money or be forced to sell.  

Is the local municipality doing anything near the property that will make the area more attractive in a few years?  

Make sure to get an inspection - it will likely cost a bit more than an inspection for a single family too.  

Maybe a few other things to consider too - try to get the owner's schedule E for the last two years.  This will tell you exactly how much income the property has generated, which is probably how much it will generate near term.  

+2 on the buy it anyway, but run your own background/credit check.  Make sure they are paying on time and properly, then assess from that point on.  If worse comes to worse, you feel they aren't working out as a tenant, then you can always not renew the lease.  

I have a property manager I've been working with for a few years now.  What kind of property do you want managed?  

Great time last night you guys!  Great questions were asked, great answers and great stories were shared.  Looking forward to doing it again. 

@Benjamin Small @Rick Doctor @Jose Pomales @Kendra Haten

Just confirming if you can all make it.

@Peter B.@Maxwell Lee@Charles Ayanleke@David Dawkins@Mitchlyn Davis@Todd Miller@Blair G.@Ethan Lee@Max Biggar@Shawn O'Neill

I want to confirm with the first few who confirmed before speaking with some of the others who responded later.  

OK everyone - 16th 7pm at Cantina Laredo in the town center.  The reservations are under my name and I made room for ten people.  

Please private message me for my contact phone number so that I can keep track of who is coming.  Looking forward to seeing all of you there for networking and knowledge sharing.  

I own a 16 unit building in Norfolk, and I was curious enough about your project to run numbers.  First I would say this looks reasonably attractive at first glance.  As others have said, you need to have PROOF of what the expenses have been for AT LEAST the last 12mos, and 24mos would be better.  Also the cost for management might be a little lower.  I pay 8%.  I would also double check your amortization, for a commercial building like this the best case scenario is you are looking at 25yr and if the building is old enough possibly 20yr depending on the appraisal report.  I would also recommend running background checks on the tenants to make sure that you know what you are getting as far as quality.  Ask for the owner's tax forms as it relates to this property too.