Calling all Real Estate Calculators

[Angello Campbell]

Shout out to all my Bigger Pocket investors out there killing it. I was wondering if you can let me know whether this is a good deal or not. (5) unit multi-family building. All units 2beds 1 bath. Current rent is $895 per unit. Asking price is $350k. I would consider this a “C” area. I currently have 3 townhouses as rental properties of which 1 will be paid in full in the next 3months. I plan to take out a loan against that property to buy this multi-family. Oh I forgot, taxes are $6407 annually. 

On another note there is a listing that is selling (2) 4 unit apartment buildings for a total of 8 units. All units are 2bed 1 bath. Price is $619K for both and the seller won’t separate them. If I was try to purchase this one, how would the loan go? Would it be a commercial loan because I’m buying a total of 8 units or would it be a conventional loan because they are each 4 units. 

[Evan Polaski]

@Angello Campbell, unfortunately, asking if something is a good deal is about as useful as asking  how much is costs to buy a car.  Well, I can walk into the junk yard and get a car for $500 or so, or I can buy a 1963 Ferrari GTO for $70mm.

Things you need to consider:
What is your risk tolerance and return threshold?
What is the exterior and interior condition of the property?
Are you responsible for utilities or tenants pay their own?
What kind of financing can you get?
How quickly is the area appreciating?
Are rents above/below/at market rates?
How are rents growing in the area?

As for financing the 2 four family properties: are these on a single taxable parcel or two parcels?
Typically, if they are on two properties, you can get two mortgages, separately, for each and they would be non-owner occupant mortgages.  You could probably also look for a lender that will do a portfolio mortgage on the two.  I would talk to a mortgage broker, since the down payments, underwriting standards, interest rates, terms, etc will vary between the two options.  Possibly, quite significantly.