I'm trying to decide how to approach an off-market opportunity I've just come across. I recently purchased a three unit building in Saco, Maine which I'm currently house-hacking, and when talking to the landlord of the four unit property next door he mentioned he's interested in selling. He showed me the house and it's in decent shape - a few units could use some cosmetic updating but overall it could be a turn key purchase.

I already have an FHA loan under my name and my lender is telling me the best options I currently have are:

1) A non-occupant co-borrower loan - 20 year amortization, 20% down, current rate around 5.375%

2) A commercial investor loan - 30 year amortization, 25% down, current rate around 5.375%

I haven't discussed a price with the owner yet but I'm thinking he will ask between $500-$600k, hopefully on the lower end. The rents are currently a bit under market so they would probably need to be raised for this to make sense.

I've analyzed the deal a few different ways and with rents raised to market I think it would cash flow around $1,000 a month.

This seems like a great off-market opportunity for me to snag another rental property without buyer competition, especially being right next to my current property, but with rates rising so quickly and a large down payment needed, I can't tell if this is something I should just let pass me by.

I could probably get $100k together but I would need to bring in a friend or family member to help out. I know the seller still owes $200k+ on the mortgage so I don't believe seller financing is an option.

What do people think about this situation? Is the close proximity to my first rental and the off-market deal worth taking a risk on stretching myself thin for a few months? Does this sound like a decent wholesale opportunity? Do these rates and terms sound about right?

Really just trying to spark some conversation and see how people would approach a situation like this right now. Any thoughts or insight is appreciated!

Portland, Maine

0 Votes