Analyze my finance situation, looking to buy a commercial/resident unit. *Leaping*

[David Huynh]

Hello BP,

I need help analyzing my financial situation and recommendations on obtaining a loan. 

Here's my background - *infant investor*

I own two condo units that are successfully rented out. My goal is to build a portfolio of real estate investments where I can buy and hold. I do not have the intention to sell the condo units listed below.

Condo 1 - 26k mortgage

Condo 2 - no mortgage

Total rent = $1850

Cashflow = $1000 (after HOA, insurance, property taxes)

I am looking at a new piece of property I've located - a commercial and residential building in a prime historic downtown location. The ground level is currently occupied and the above level units are unoccupied (I will be living in one unit) and the other unit is vacant and will remain vacant (left in demo stages). I would LOVE to purchase the building and live in the current unit and put sweat equity into the vacant unit to rent ($1100/month) and raise rent on the lower unit if I am able to purchased $2000/month (current) to $2500/month. 

Please help me analyze the situation - ask me questions that I should be asking/thinking of.

Property:

4200 sq. feet (2100 ground level, 2100 above)

• 2100 ground level - commercial
• 2100 above level - 2 residential units

Price:

Sold - 447k in 2009

"Online estimate" -540k-560k

Ground level has been remodeled

Above level needs remodeling

My ball park estimate - 525k

Current property income:

Ground level - $2000/month

Above level unit 1 - $800/month (me renting)

Above level unit 2 - $0/month (vacant)

Total: $2800/month

Possible income:

Ground level -$2500/month

Above level unit 1 - $600/month (I plan on living in here and having significant other pay)

Above level unit 2 - $1100/month

Total: $4200/month

*If I were to purchase property - I would live in one unit and raise rent on the commercial side and rent the above level unit 2 for roughly $1100/month

Expenses:

Property taxes - 12k/annual

Insurance - $500-600/annual unknown?

Maintenance - unknown?

Some questions that I have -

1) Is there a bank or company whose willing to finance these types of deals? Is this called hard money lending?

2) How much generally do I need down for a commercial/residential? 15% 20% 25%?

3) Does my income affect the qualifying process? Does the current rent affect the qualifying process?

4) Does my infant stages of being a real estate investor have an affect? (Currently own two property)

18-24 month Financial forecast:

50k base + bonuses

Income from rent - $1850 - $850 (HOA, insurance, property taxes) = $1000 cash flow.

35% debt-to-income

25k-50k down payment

Again, I am new so be critical and help me ask the right questions!