All Forum Posts by: Scott Seaman

Not sure how you avoid a conflict of interest appearance doing that one. All it would take is one arm-chair quarterbacking attorney in a family to prompt someone to come after the rich lady who made money off flipping their home after talking them out of keeping it (at least, that would be the version they'd remember...)

@David Schulwitz - I can't tell from what you posted if you are using current rents for all units or have already subtracted the unit you plan to live in. Overall your expenses appear to be over rather than under estimated, so you should be in good shape there. Insurance & accounting will probably run you more than budgeted because of that hybrid owner/occupant plus tenants situation but not a ton of extra cash.

As far as depreciation, you can't write of the portion of the building you live in (assuming 25%) - you'll also account for the interest portions differently than if it was just OO or just tenant occupied.

Not sure if you are planning to self-manage since you included money for a property manager - but recommend that you do it yourself for a few months. The hands on experience will give you a better way to gauge any PM you are interviewing later on

Have you talked to your VA lender yet? Without any recent property management experience and/or 6 months of PITI in the bank as reserves, they many not count the other units' income toward your ratios - could be an issue if you need that to qualify. They can also give you a quick run down of what fees a seller must pay and which other ones you can negotiate for the seller to pay on your behalf. If you don't have an agent already, find one who works with VA loans - the rest of the market acts all freaked out over them, but they really are the most straight-forward products out there.

If you have a rating, the funding fee is waived - or if you're eligible for one but don't collect due to current active duty status. And the 1 year occupancy requirement is automatically waived should you get valid orders to transfer. 7,900 sq ft? Those units must be huge

Good luck with it!

@Ashlee Casserly

shoot me the details on that 12plex when you get a chance please

[email protected]

You need to look at permissible use in the zoning and any impacts you'd have under a change of use under the building code (sprinklers, additional exits). You can probably get away without all that until a neighbor gets upset about noise/parking issue or there's a fire and you discover your policy won't cover you.

@Daniel - The rest of these answers makes me question a few of your assumptions about what you'll be able to increase the property income/value to.

If you give up 3 parking spaces in the garage, what does that do to your ability to keep your CO to rent out all 9 of the other units? Tax office indicates a special use was granted in '07, does that automatically transfer or do you have to reapply?

It looks like the listing she owns next door shares the laundry room? Not sure which lot it's on. While an additional 4 units using the laundry seems like bonus money at first glance, how does that impact your ability to increase rents in your units if tenants feel like they don't have easy access to the laundry?

Looks like tax value is actually $285, not sure if that makes a difference to you - but you can't compare it to a 4 plex since 2-4 units are valued out more like residential where 9 units is done more on income/replacement approach.

Only 1 of the 4 that's she's selling has a contract - it sounds like she really doesn't want to be tied down with the properties at this point so she can travel - how do the numbers work if you took the money from your parents and used it for 10% down towards all 3 of the properties - giving you 29 units pretty closely grouped together. Is your cashflow/economies of scale enough better to make that deal more attractive? What if you got a 50% first, gave her 10% cash and let her carry a 2nd for the balance/annuity payment she wants?

You seem willing to set a lot of other things aside to secure that owner financing. And yes, 5% is attractive. But have you checked with a bank to see what they'd be willing to do on this building (or all 3). You mention your family has rental property in town and are willing to help you with the down payment - they probably have some banking connections that you should explore. That owner note at 20 years is squeezing the deal in ways that a 30 year amortization would not be. And it's certainly not attractive enough terms to overpay on the property. There's a reason that the 8 unit that she had listed at 50k/unit is under contract while the one's that are 62-72k/unit are still sitting there.

What sort of shape is the interior? There's no pictures and not sure if lazy agent or if the best looking parts are all on the outside? Roof was replaced in 1998 - nothing online about any HVAC, I'd certainly go look up permits at City Hall to see if you're about to become the proud new owner of 9 new apartments that all have heat/air that have outlived their lives and need to be replaced soon. There isn't enough cash flowing in this deal to swallow that all in one short timeframe.

Beyond liability, if they are providing drug/alcohol rehab to persons still under the control of the courts through probation type arrangements, there may be some legal reasons that they have to limit contact with outside persons who could supply drugs.

Scaffolding? Priming a middle finger on that side of the property for a few days may relieve some stress. No, we never totally grow up.

Don't know them but if they aren't willing to deduct that fee from their guaranteed $50k, its not guaranteed.

How much did they buy it for 10 months ago?

Patrick L. Thanks for that detailed info

Friends up here along the Blue Ridge Parkway do well with them - but the money makers are the oversized 7-8 bedroom types that can sleep the entire extended family of 20+ versus the bread & butter 3/2's you're probably more used to. I've been amazed at how little extra wear & tear there is with that many people in and out of there.

Caveat is that we are the only town actually on the entire 470 mile Parkway and we have the only snow skiing south of WV so there are a few unique draws to pull from a huge market area.