All Forum Posts by: Brady Boyer

I recently put a 4 unit property under contract and the appraisal came in 25K under the price I agreed to purchase for.  The seller was very set on getting his price during negotiations and I was willing to pay his price because even at his price its still a great deal. It will cash flow at ~ $1000 a month, so I want to get the deal done. However now the appraisal comes back below the sales price and I doubt he will budge on price. 

My questions relates to the accuracy of the appraisal. The appraiser used a comparable sales approach instead of an NOI method and I live in an area where there aren't that many 4 units to start out with. The most recent comp is 10 months old and the other two comps are older than 12 months and one of the three comps is 8 miles and 2 out of 3 comps are in different school districts than the subject property.

I asked the bank why an NOI appraisal wasn't done and they said they won't accept an NOI method as comparable sales is more conservative. They also have forced me into commercial lending since they say anything not owner occupied is commercial even if it were a single family home, so I find it interesting that they want to give me a commercial loan but won't use a commercial valuation method to value the property. Has anyone else heard of this or experienced this?

@Alan Feldman That is what I initially assumed also but upon digging further he said he won't provide them because he doesn't want to reveal client information. It doesn't raise a red flag per say but would like a little more information on what I am getting into.  

I have walked all 4 units and plan to have the basement inspected along with a structural and termite inspection. It is recently renovated so I am less concerned with the inspection than I am with future vacancies / tenant quality. 

I have a 4 plex under contract in York, PA and currently all 4 units are leased.  As part of my diligence I requested the credit checks, background checks, and rental applications from the current landlord.  He refuses to send these materials as he claims he won't release information about tenants.  I was under the impression this was part of the normal due diligence process when buying investment property. My fear is that he leased up the building with low quality tenants and doesn't want me to review the tenant screening materials.  Has anyone else come across this issue in PA or elsewhere? I'm assuming I will need their permission to run background and credit checks? Any suggestions for how I should handle this?

Hi I am looking at a property in York PA that I can buy for $220-$240K. The NOI is ~$2,600 per month. The apartment currently has 4 units that are leased and were just renovated. There is a basement (5th unit), which was not renovated, but could be rented if renovated. I am attempting to get residential bank financing. The seller is selling it as a 4 unit to avoid having to deal with commercial financing (he thinks it appeals to more buyers). I could scrape together the 25% down payment, although it would leave me very thin in case of any unexpected expenses came up (personally and rental related) and would leave me with large tax bills as I would have to sell investments from when I was young. I am wondering if I might be better off going for the commercial loan? The NOI is very strong, and I feel like that is being neglected in the residential loan process (all they are worried about is hitting the 25% so they can sell the loan). Has anyone dealt with an issue like this or gone through the commercial loan process?

@James Carlson Noted; thanks for the advice. 

@Grace Porritt There is not a private bath but that is pretty standard to have a shared bath in NYC.

@William Rugen

Understood on the sublease point. I am not sure the difference in occupancy rates because most rooms I have seen are similar to mine.  I can say the rooms where you get an entire apartment are much more expensive in terms of daily rate. 

@William Rugen

I just estimated that 67% for illustrative purposes.

@Joseph M.

@Marcia Maynard

Yes, my lease does have a no sublease clause.  However, this technically is not a sublease as there is no agreement between my landlord and the guest.  Now I also get that this is a gray area. I also know of other apartments in my building that are listed on Airbnb and the landlord/management company are not very hands on, and I struggle to even get them to fix things.  As long as the rent is paid that is all they care about. 

In regards to the door knob issue once again this is technically and upgrade to the apartment so I don't think the landlord would care, but I will also keep the original knobs and can replace them prior to move out. 

@Ray Harrell 

Understood on the en suite bath.  Why do you not drop the price in the winter to encourage more guest to stay?