First Small Apartmnet

[Joe Edwards-Hoff]

So, my dad emailed me a link to a Craigslist ad for a local multifamily for sale. We live in a small town of 12k people. All this said, I don't know how serious he thought I'd take it, but it has got me thinking. We own a SFH about 100 miles away where we used to live in a college town. It rents for 1300 and we pay 620 for PITI, and we pay a company to manage it. It's a good little investment (we don't really plan on being "big time" investors, but I'd rather do real estate than stocks/etc).

So, what he sent me was a 10 unit small apartment complex. Some single bed some studio. There is also a 1500sqft SFH on the property.They say that the property pulls in 5500 a month. They are asking $350k. Now, I'd have amazing credit, but only about 20k in the bank. We owe 80k on our rental we currently own, but Zillow estimates it is worth 195k. Anyway, I was just curious on your guys thoughts. I looked around Google, but "buying 10 unit apartment complexes for $350k" is not a popular discussion. MOst things I see are huge complexes worth 1M or more. I'm not even sure how financing works. I mean, this place is not all that much more expensive than the home I live in... (250k). We also make about $95k per year and have no debts aside from the who homes.

I appreciate your guys' help. I used to frequent the forums more and read up on real estate investing, but lately life has had me focusing on the here and now. Again, thanks ahead of time.

I know that there are MANY more variables to consider here, but would I be crazy to consider making an offer contingent on the sale of my other property? It is FSBo, but he will not carry the contract, or so the ad says.

[Donald S.]

Well @Joe Edwards-Hoff, if you think this is something you wish to pursue, look into a Line of Credit on the rental home (and possibly your primary home as well). LOC's can be great ways to do the down payment on a property while keeping your 20k cash liquid to cover repairs etc. If you think the rental is worth 195k and you only owe 80k, you can probably get 70-75k on a LOC from a credit union or local bank. 25% down is pretty common for commercial loans, so at 350k you'd need about 85k. I'd do the LOC for 75k, ask the seller to carry back 10k on a 1 year note, or negotiate down the price if possible. Hope this works out for you.