Multifamily buying process

[Matt DuSold]

Hey Everyone,

I have been sitting around for WAY too long waiting to get into the game and decided that multi family properties that give me cashflow right now are a solid bet. I stumbled across a 6 unit property it is 2 triplexes but they are selling them together. It is a short sale so I'm assuming thats why it is such a great deal but we will see.

Cost is 82,700
Each unit is rented out for $450 a month right now.

There are a few problems, it says drive by only and I have no credit. As far as the drive by, I have a right once in the process of being serious to check out the units and talk to the tennants and obviously get an inspection done correct?

As far as my credit issue, I have "perfect" credit but the problem is I have never carried a loan. I have a pretty good amount of cash and my DTI is very high because I don't have any debt.

My main concern though is will the agent let you go talk to the tennants and check the place out. The deal numbers wise works but I will not buy this place blind. It isn't a great area but it isn't a war zone either.

Thanks for your help!

[Jon Holdman]

Are the two triplexes separately deeded? If so, your loan situation will be simpler because a triplex qualifies for a conventional loan.

You say you have no credit and perfect credit. Sounds like its actually no credit, which is not perfect credit, unfortunately. You say your DTI is high, but that can't be the case if you have no outstanding debt. Do you have a solid W2 job? Will the income from that job cover the payments on these properties? Have you spoken with a (or some) lender(s) or brokers? If not, I'd start there and see what's possible.

Do you have a decent (20-30%) down payment?

The numbers sound good, but you'll still need to get the money.

Is there good demand for this type of property?

If you buy at that price, and put in whatever money is needed to get them into rentable shape, are you still at a discount compared to similar properties? Do you have the cash for the fixup, after making the down payments?

If its a short sale, its the bank's approval you really need, not the seller's. The seller is a step, but the seller's approval means very little. State in your contract that earnest money will be provided by certified funds within (say) 48 hours of the lender's approval of the deal. Otherwise you can end up with cash tied up in a deal that's going nowhere.

You'll probably need to have an approved contract before they will let you in to look at the place or talk to the tenants. Tenants can get spooked when buyers start walking through and can move out, making a bad situation worse. But once you have a contract in place, the seller knows you're serious and that you need access.