All Forum Posts by: Amelia McGee

Community First Credit Union quoted me on a commercial loan of 80% LTV with a 5/5 ARM on a 20 year at 5.25%.

@Ryan Avila For sure! Great advice and definitely something we will act on.

@Kevin Manz It is a huge building! I think each floor is around 3000sqft - possibly more. Hadn’t thought about adding additional units (other than in the basement) but definitely something to consider and talk to the contractors about. 

I just secured a loan on a triplex with a 2.85% interest on a 30 year with a local lender. Credit score and cash reserves have a lot to do with it. 

I agree with @Kyle Wells on keeping the 30 year for the flexibility. 

@Joe P. I think a portion of this depends on your end goal. Do you want to retire with a paid off property (refinance to 20 year and shave off 8.5 years of loan)? Or do you want to reduce your P+I, and in turn, increase your monthly cash flow (refinance to 30 year)? 

If it was me, I would refinance on a 30 year amortization and reinvest the money I'm saving in P+I. By paying the mortgage off sooner, your ROI is only as much as the interest that you saved. I think you'd be able to get a better ROI by buying more properties.

Definitely don't stand pat right now with interest rates as low as they are! 

@Rene Owczarski We're on the same page. I just ran the numbers and got a cap rate of 9.75 and a value of $250,000 after renovation. Those are conservative numbers as I overestimated for repairs and underestimated on rent. 

Great idea on reaching out to the company that rehabbed the other building - I know the project manager who was in charge of it so should be a good foot in the door to get some info.

@Darson Grantham @Andrew Kougl Thanks, duders! This is my first 5+ multifamily that needs a lot of rehab so I appreciate the help :)

@Andrew Kougl Yes, it would definitely be a buy and hold rental - I've run the cash flow and COC returns from my rehab/purchase price estimates already and they look good. It's a little harder to run cap rate since I don't know what the market value of the property will be worth after renovation (due to little comps in the area).

Good idea on the GC suggestion - I'll be contacting a few in the next couple of weeks to put together estimates.

@Darson Grantham Thanks so much for the response! I know it can be easy to get sucked into 'home towner' thinking which is why I want to carefully analyze this deal before moving forward. I'll run some numbers on your suggested formulas but my big problem is I have no idea what the ARV will be because there are so few comps in rural Iowa. Right now I've estimated repairs to be around $150,000 so I guess I can use that as a starting point.

Hey all -

I need help analyzing a deal on a very unique 5 unit multifamily property in a small town in southern Iowa. The building is a large brick building designed by a prominent engineer in the 1920s.The town where it's located is actually my hometown so I know the area very well and still have a lot of connections there. There is a significant need for updated/low maintenance/safe housing so I do not think there would be any problem finding tenants for these units. For example: I have another 3 unit multifamily in this town and was able to fill the apartments the first day I posted the listing. I also own a SFH in this town and had that filled before we even took possession. There is also a hospital, large grocery chain warehouse, only school system in the county so there are people with money who would be willing to pay a premium price for a nice place to live. Retirees, doctors, teachers, etc.

Couple Predicaments:

1. The owner has let the building sit vacant for 20+ years. The roof has leaked extensively and it will likely need to have all new systems (electrical, HVAC, plumbing, flat roof, refurbished steel casement windows, etc) along with significant updates to flooring, walls, bathrooms, kitchens, etc. I have never done a major renovation like this so I need some help estimating costs.

2. My other issue is the owner himself. He's 82 and a little bit off his rocker - thinks he has a one of a kind gem that is worth hundreds of thousands of dollars - and it could be but not in the state that it's in right now. We've offered him $45k cash or $70k owner financed with $20k down and a balloon payment in 2 years. Still waiting to hear back from him on these offers. Any ideas on how to get him to sell? I would be willing to go up in price as I think the ROI would still be worth it but I'm not sure how to go about estimating this.

3. There are VERY few comps in small Iowa towns to compare to. I don't know how to get to an ARV to be able to estimate my top dollar offer. The plan would be to buy cash and get a construction loan for repairs.

The units themselves are huge. There are 2 - 2bed/1ba on the main floor at probably around 1,200sqft each. There are 2 - 2bed/1ba and 1 - 1bed/1ba upstairs that are also very large with huge bedroom closets. There are two large storage units in the hallway upstairs that could easily be converted into laundry (right now laundry is in the basement and we would want to move these upstairs to get a premium price for rent). The basement is also a full basement with 9 foot ceilings and a bathroom. Could easily be turned into a 6th 2 bedroom unit. I think it wouldn't be out of the question to ask $850/mo for the bottom units and $800/mo for the top units. There is another building in town that was built by the same engineer and renovated 5 years ago that rents for $950/unit and is always full with a wait list.

If anyone has any advice or experience with something like this it would be greatly appreciated. Also, if there are any investors in Iowa who would be interested on partnering for this deal, please reach out to me privately.

I'm posting a Google photo of the property for reference - it's the best I could get!

Thanks for reading!