Very Green, Need Deal Structure Help

[Betsy Anater]

Extremely green!!

Nonetheless I have an appt with to see a house in 12 hrs. Seller has house listed with agent at 274,750. Owes 40K. Legal three unit bldg, three tenants. None with a formal lease. Seems to b in very good condition w recent important improvements. Comps are hard to find since most in area are 2 units (not 3). Nonetheless can find lower comps (2 unit) around 200-210K, same sqft, bed/bath. Ok to good area.

She’s owned the house 30 years and over the phone mentioned she wants to be done with this property/ being a landlord. I found that she has, since 2007 on and off, unsuccessfully tried to sell it. Will find out why. I’ve been scrambling to gather info to the point where I have totally confused myself. What type of deal structure/s should I be aiming for keeping in mind that it’s a listed property?

[Jerry W.]

Welcome to BP @Betsy Anater . Here are my thoughts, first talk to the tenants or get their phone number if they appear uncomfortable talking to with the owner or agent there. Find out how long they have lived there, what they like and don't like about the property. They will know if there is a major plumbing problem or house settling problem, etc. Also find out the rent of each tenant and the comps for rents as well. The goal is have cash flow, will you make or lose money based on cash flow? In multi units it is very important to find out who pays the utilities. Those can make a huge difference, if utilities are not metered separately then usually the landlord pays for them. If utilities are $150 to $200 per month per unit it could make or break the deal. Lawn care, snow removal, common area upkeep are all extra costs that are overlooked when you calculate insurance and taxes, but they are just as real. Do the units need upgraded? If they are ready to go now great, if they need new bathrooms, kitchens, etc. then factor that in too.

I agree with @Bill Gulley that finding the motivation is very important, if you don't know why they want to sell you cannot tailor your offer so it helps close the deal. Do they want regular secure monthly income with no hassle, or do they want to sale and move to Florida? Good luck and keep us posted.