Buying a group of four duplexes all fully rented.

[Cassidy Adams]

Hi there,

I have found a group of four duplexes, all are fully rented with month to month leases, that I am interested in buying. It will be my second investment package as I already own an SFR and am trying to build my portfolio. I want to add these properties to my portfolio as soon as possible and I will be meeting the seller to discuss more in depth of these properties soon. I am not sure what questions I need to ask the seller? Also I live in Utah and the properties are in New York, is that more of a hassle than its worth?

I feel these properties are priced fair based on the estimated positive cash flow, however, I cannot get funding through traditional lenders(even though I have good credit and money to put down) I am curious as to what some of my finance options could be for the package?

Any comments or suggestions left would be a huge help! Thank You for your time and thoughts.

Cassidy

[Simon Campbell]

First, I would be concerned about buying properties out of your area.

Reason #1: You will need to hire a property manager and a good one which will take around 10% of the income off the top.

Reason #2: It is hard to know what is a "fair price" in a market that you may not be familiar with. You will need to take the time to do your due diligence. This would include home inspections and even personal inspections to determine the true quality.

Reason #3: There is a much higher risk in having investments that are out of your control and out of sight. Investments in a neighboring town are alright, but half a country away?

Second, estimated cash flow is never a good idea. To reduce your risk, you need to find out the actual cash flow. Receipts, utility bills, tax records etc should be provided along with rental rate research.

Third, finance options. Seller financing maybe a good option here. Hard money is an expensive short term solution - not a long term finance option. Partnerships can provide financing but then there is the profit split and another's opinion to consider.