Residential & Commercial 4 Plex Deal Analysis

[Danny Di]

Hey everyone,

I'm trying to get in to real estate investing and I found a little something which caught my eye so I investigated it in depth and I'm wondering if I can receive expert analysis from the pros on here. This property is about 45 minutes out of the city in a very nice quiet area. I just sold my condo so I have the option of moving in to this property and buying another property for myself OR to buy this for investment purposes only.

For resale, this would be tough due to the fact that it's been on the market for 4 months already with no sale. The sellers agent advised that they received several offers for it but no one can come up with the financing and 35% down payment.

This property is an 1800 Sq ft home which is currently being tenanted. Behind the home is a big detached garage with a 2 bedroom apartment above the garage which is currently tenanted. The garage is equipped with an office and washroom - vacant. Attached to the home is a variety store which is not in business any longer - vacant.

It's currently bringing in $2050/mth. It has the potential of bringing in 4k/mth based on on the past numbers which were supplied to me below:

1. STORE - previous lease - $1400/Month + heat&hyrdo - $16,800/year
2. Main House - $1250/month + heat - $15,000/year
3. Workshop/Garage previously rented $600/month + heat - $6,600/year
4. 2 Bedroom above workshop $800/month+heat - $9,600/year

The 2 tenants are on month to months and are willing to stay. I could move in to the 2 bedroom above the garage and live there myself, that's an option which I've considered.

I had the wild idea of getting the variety store running, I'm not sure if I can have someone run it for me on a full-time basis and maybe SELL the business and lease out the rent to the new owner and bank the business sale proceeds...what are your thoughts?

Back to the numbers...unfortunately, because it's got a commercial lot attached, I can't get a residential mortgage loan with 5% down. The bank wants 30-35% which I cannot afford. I called around and found an option for 15% down which may be possible. It would be 2 lenders financing the mortgage with the below structure:

Mortgage:

-1st - at 70% LTV $244,300 monthly payment of $1303.81/mth

-2nd with Private lender at 15% $52K total 85% LTV monthly payment of $634/mth (INTEREST ONLY LOAN)

The lender/brokerage fees to set these up are roughly $7K-10K

$52,500 Downpayment (15%)

$8.5K FEES

Total Cash - $61,000

Mortgage + Expenses = $3085/mth

I basically don't have 60k so I'll need to open a LOC to cover half of that amount.

Basically, if I have all 4 rentals going at the same time I'll cash flow approximately 1k/mth. Or, I can move in to the 2 bedroom for 800/mth instead of buying a secondary property for myself which I'll need a 350-400k mortgage for. Tough situation..

What are your thoughts?

Thanks,
Dan