Apartment with No Tenants?

[Dustin Smith]

Hey all, 

I've got a 20 unit apartment I'm looking at 2 blocks from a major university.  The listing was pretty vague, but I've dug around and gotten some of the background information on the property.  I've come to the conclusion that it was basically an apartment flip.  The owners purchased it, rehabbed it, and are now selling it.  From what I can tell, everything looks good, if you overlook the fact that there are currently no tenants in the building.

Is this an automatic deal breaker? The building is a FSBO, and they're offering owner financing, so I imagine there is some flexibility in terms of actual payment schedules.

Thoughts?

[Account Closed]

ehh, youd be surprised. more common then you think when your getting into apartments that size. especially with seller financing. You gotta remember for some people that is a steady stream of income so why cut it short by 10 years. I would recommend asking the seller what they are looking for, that is your starting point. I try to play seller financing as a larger benefit to them then it is to me. Show the 10's (or 100's) of thousands of dollars the bank will receive on the financing instead of them.

Especially if the seller is close to retirement, thats where you can really play this card. if they own it outright (likely the case if their offering seller financing) then try ask them what they want the money for? If their retiring their not gonna stick it in the stock market with DOW 18000 if their smart. If they put it in a CD or bond or interest bearing savings account which is the most likely option for someone retiring then their gonna get chicken scratch for a return, likely 2% or less. Under the right circumstances you would be willing to let them finance the note and pay them more then their 2%. They now can get a secured (by the property), safer investment then the stock market (fixed rate), higher return then a bond or cd upwards of 4% or 5%, best yet they can get it for 20 or 30 years depending on what they are looking for, now thats a solid stream of income for them! obviously after a certain amount of time being interest free of course. This would likely net them much more their  asking price while getting more favorable tax treatment. And if you (the buyer) default on the loan to them, they get to keep the fat down payment and the property! 

Remind them, otherwise they are gonna have a tough time with any buyer because banks dont like high vacancy, and they Hate complete vacancy. Tell them even getting it occupied wont help in many cases banks want historical rent rolls to see if rents are increasing or decreasing on the asset. 

Look at it that way and I would say they need you....

If their not looking for that income stream..... well then my argument doesnt work very good :)