First Commercial Property (20 units) - Advice Requested

[Ed Long]

Hello,

I'm making an offer on my first commercial property. I've been investing in the area in 2-4 unit properties for about 15 years, and have decided that a larger unit will better fit my investing/return requirements. I've read all the forums here, as well as others and am looking to touch base with someone that has gone through this as a mentor.

Details on the property.

20 Unit, 2 bedroom (master and second, both good size), eat in kitchen, 1 bath, good sized living room. Arranged as a garden complex of 4 buildings with 5 apts. each. 1 apt. in basement, 2 first floor , 2 second floor. Coin op laundry and storage in other side of basement.

Apts. look to be 10-15 years w.o any updates, they are livable and clean, but a outdated. Carpets, kitchens and baths will have to be replaced over the next 1-5 years. Everything else, the structure, roof, furnaces, etc. looks to have 7-10+ years of life left in them.

Avg rent is $750+

All utilities, including water is paid be tenant (which is nice in this area, as separate utilities for these sized units is rare)

Numbers: AGI is 182K with 5% vacancy

ESTIMATED: all non-loan expenses , including taxes is 72K/year

Asking price is $1.4mm

Offer is $1.0mm, and hoping to settle at $1.2mm

Cap rate of ~9%

I have good credit, last check my score was 790.

Questions

- I have to apply for financing. Should I ask the owner for financing? He may agree to a 2-3 yr. loan. (Not sure terms yet).

- If I owner finance, will I have issues refing with the bank in 2-3 years?

- I will request no penalty for early payment.

- What strategies have buyers used to reduce the tax burden on the seller? In other words, I'd like to offer an lower price with better tax implications for the seller, netting him the same amount.

- Is there a great template that I can use to take to the bank, spreadsheet, plus word document of my landlording experience. Any input on calculating the best loans (e.g. fixed vs. variable etc) and dealing with banks/lenders would be very much appreciated.

- How much impact will owning a half dozen other smaller properties have on the lending potential? Tax wise they break even and are all in the range of 20-60% paid off.

- Going to incorporate into an LLC. Will the bank request personal guarantees on the loan? Is so, how does one remove this contingency, as I don't want to put my life savings at risk.

- Any advise on private lending through some of the new P2P lending sites vs. traditional methods?

- What should I expect the buyer to provide? I expect leases, rent rolls , tax returns? The agent looks at me funny for some of these things. I would expect at least leases.

- Any input on great ideas to execute once the property is turned over to me in terms of communicating with the tenants on where to send checks, maintenance calls etc?

- Anyone with experience negotiating deals with Cable/Internet providers to reduce costs to tenant, or allow me to provide and recover costs?

I'd be happy to provide any other information.

Thank you very much.

- Ed