Rental Property Investor 路 Fairbanks, AK 路 Member since 2018 路 16 posts 路 1 vote
OK, so here it is. I recently came across a 5 unit property for sale, a tri-plex and duplex being sold together on the same lot. 1st question, in terms of conventional financing could I consider the buildings seperate and get a blanket mortgage for two residental buildings? Or since the sale includes 5 units regardless if the buildings arent connected, will it have to be a commercial loan? 2nd question, the owner is willing to do a seller finance (great news!) but I don't know how to finance the remodels needed, because each unit will be remodeled as tenants move out and not all at once (All the units are currently being rented aka instant return). Would it be worth it to find a HML, kick all tenants out at once, remodel everything, refinance with a bank and then re-rent? Or how can I finance remodels one unit at a time? (Sorry I know thats like 4 questions in one) Any insight would be greatly apprciated!
OK, so here it is. I recently came across a 5 unit property for sale, a tri-plex and duplex being sold together on the same lot. 1st question, in terms of conventional financing could I consider the buildings seperate and get a blanket mortgage for two residental buildings? Or since the sale includes 5 units regardless if the buildings arent connected, will it have to be a commercial loan? 2nd question, the owner is willing to do a seller finance (great news!) but I don't know how to finance the remodels needed, because each unit will be remodeled as tenants move out and not all at once (All the units are currently being rented aka instant return). Would it be worth it to find a HML, kick all tenants out at once, remodel everything, refinance with a bank and then re-rent? Or how can I finance remodels one unit at a time? (Sorry I know thats like 4 questions in one) Any insight would be greatly apprciated!
Well, I can offer a couple of insights. One, look at the county records and see if they both on one parcel or are they are on separate parcels? Banks lend parcel by parcel. Two. Take the owner up on the Owner Financing. It's almost always cheaper, faster and a whole lot easier to deal with the Owner rather than a bank. Try for Owner Financing, Wrap or Subject To or Land Contract before accepting a Lease Option. You don't own the property with a Lease Option. 3. Remodel as the tenants leave and then raise the rents to reflect the upgrades. 4. You can put the cost of remodeling on your credit card or your "investor's" credit card. I once traded a 19' Fishing boat that I took in trade for a down payment on a house and traded it for supplies. Don't think in terms of "cash" only. That is simply an easy way to transfer assets. Look at your assets and turn them into something productive. You got a good deal, don't let it slide by.
They're on the same lot, or parcel. Thanks mike. I figured it would be a long road to remodel, but it's just not talked about, unlike the HML then BRRRR method. Which honestly is such an easier route 馃し馃徏鈾傦笍
Try to put as little down as possible, maybe 5% or 10%. At this low down payment the property should still cashflow at least $100 per door per month after the payment, taxes, insurance and accounting for 10% vacancy. If it doesnt, dont buy it.
Treat this like your 401k. Put $300 or if you can $500 per month into an account strictly for the property. Accumulate the money you are putting into the account and the cash flow every month. When someone moves out, you will have money to rehab the unit. You should be able to raise rents with a rehab so your cashflow should increase over time.
Dont stop putting money into the property checking account. When it gets big enough, you will have money for a down payment on another property!! Let the account grow.
One thing I do is cash-advance biz credit card. It鈥檚 not as bad as it sounds. If done properly, it actually trumps some of the other financing out there.
Here鈥檚 what I do. I鈥檝e been a 8+ year card holder, with great credit and a decent line amount. The card provider regularly sends me offers of 0% APR for 18-21 mos. Trans fee only 1-2%. And I can advance up to 92% of my line. No collateral, fully unsecured. Just flex cash. As long as I repay before term, its great. If you dont have rhe cash by then, looK at refi property to get the cash