All Forum Posts by: Peter Nikic

Investment Info:

Large multi-family (5+ units) buy & hold investment in Chattanooga.

Purchase price: $900,000
Cash invested: $270,000

This is the first, hopefully not last multi family purchase in Chattanooga, TN. This is a 9 family building recently renovated. Good shape, good returns.

What made you interested in investing in this type of deal?

These are the types of properties that I'm most familiar with. They're generally a little too big for a small/new investor and too small for the larger investor.

How did you find this deal and how did you negotiate it?

Online, loopnet I think.

How did you finance this deal?

Regional bank 70% LTV

How did you add value to the deal?

This property is in good shape, it's a buy and hold. Should have good consistent returns.

What was the outcome?

It took some time, but finally closed.

Lessons learned? Challenges?

Bank required what they called a "Global Debt Service Ratio" because of the price range of the property.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

KW office in Chattanooga, well run office, good agents. Pinnacle bank was the lender, easy to communicate with. Overall very good even though the "Global Debt Service Ratio" was a little bit of a sticking point.

There are possibilities. I'm currently investin in TN.

It could. One potential problem is that your 15% down today may be a lower $$ than the 25% required next year. 

It could be tricky. Even if value goes up, the bank may appraise for lower. Bank will finance 75% of appraised value which could be very different from what you think it may be valued at.

ex: if you purchase for $800k with 15% down (you'll need $120k). if bank appraises property next year for $800k, you'll need an additional $40k plus closing costs to close. You'll need the bank to appraise property at $900k in order to not have to put any more money down. This is going to be unlikely in one year unless there's a lot of upside to this property.

If the property can produce a lot of extra cash (after ALL expenses are paid), then that could be a way for you to save the additional cash needed at refinance. This is a great way to do it if the property leaves a good profit. Essentially you use the property to help you generate the future down payment.

My other suggestion is get the property with owner financing as you intend, but don't put the 1 year as a timeline. You refinance when you're ready. It could be a yera, but it could very well be 5 years. Don't rush/push it. The extra interest you're paying is the offset of a higher downpayment. For you that might mean the difference of buying it or not buying it. 

Good luck

and while NYC has NONE of the advantages that I mentioned above, you still might be right. But I think only for those with deep pockets, not someone starting out.

Who's to say "Best" but there are a lot of great places to choose from.

I'd say start by looking at the data: growing population? business friendly? landlord friendly? Taxes - real estate and state?

Then think about either traveling back and forth or relocating to these places? this will help you decide.

You shoukd try to get it with as little down cash as possible, that might need to be 25% or 30% though. In most cases, for commercial, I've experienced a minimum of 25% down. I'm getting one in TN for 30% down at this time. But look for credit unions in your area, that coulbd be gpod both for down payment and rate.

Good luck.

good plan, doing this in TN

http://www.leedan.com/2Easy/2E... 

Lee Dan Intercoms 

I used to estimate insurance at $500 per unit per year, but this can vary quite a bit, especially these days. 

I'm looking for good insurance companies/agencies in Chattanooga TN. Anyone have any suggestions?