All Forum Posts by: Wade Garrett

I am in contract on my first multifamily (4-plex). Since we have gone into contract, one of the tenants has been served a notice of eviction for nonpayment of rent. I have two questions:

1. Should I wait until the eviction is resolved with the current owner to close on the property?

2. There has been another (higher) buyer since we've gone under contract. Should I be concerned that the seller can use this extra time to break contract and sell to the other buyer?

Thanks,

Wade

Thanks all! Very helpful thread. 

Craigslist

Zillow

Trulia

Realtor. 

When you have a vacant property, where are you advertising for it?

Closing costs are going to be much higher than 0.1% of purchase price. Attorney fee alone should be $2,500. More along the lines of 3%. That's going to impact your ROI massively.

You may know better than me, but property taxes are only 1% in San Francisco? I would check the property on the county site. Should list the property specifically. 

The NOI is very suspicious. Nothing in San Francisco has a cap rate of 8.5%, especially with a 10% mgmt fee baked in. More like 2-3%.

I once read that it is ethically wrong to increase a person's living costs just because you can. A $175/month increase will probably force your only tenant to walk. I know i would. And if she didnt, its a horrible way to begin your landlord-tenant relationship. Raise it slowly over time. But don't focus on her as the main issues. Its the other two units producing zero.

Thanks guys. You've been very helpful. I was being quoted 4.5% for a Fannie Mae on a four unit, which sounded absurdly high. But then I had another major lender quote me something north of 4% as well. Made me leery of the brokers being so low (3.625%). The banks' rationale was "These are Fannie Mae requirements. If someone has it lower they are lying." I eventually settled at 3.75% with a big bank.

I am high 700's. 

But my question is about the 1/8% to 1/4% bump in rate for each unit. I am getting two different stories from two types of lenders .

I am in contract on a fourplex and have four conventional rate quotes that are varying drastically. 

Background: It will be an owner occupied fourplex, 30 yr fixed rate with 20% down. $400k purchase price. 

Two brick and mortar shops are quoting me 4.125% and 4.5%

Two brokers (one with good reputation) are both quoting me 3.625%. 

Traditional lenders are claiming that Fannie Mae demands a bump of 1/8% to 1/4% for EACH additional unit beyond 1. Is this true?

I am suspicious of the brokers, as it seems too good to be true. 

Thanks.

The NOI was implied in the post.

$52,200

-$14,600

-$8,250

-------------

$29,350

6.8% cap rate is appropriate for the area. 

Thanks for the advice. I will definitely bring up radon and mold with my inspector. 

As for location, I am choosing not to share specifics right now as the deal is not done yet. Obviously don't want to shoot myself in the foot while just asking for some friendly advice. But I am comfortable with the quality of tenant and rentability of the building in the area.