All Forum Posts by: Brett Dufur

Kristine, thanks for weighing in, I appreciate it very much! 

I did have an independent appraisal done for that very reason. I'm also having that appraisal reviewed by a local real estate agent to get her 2 cents. I've toured the property and found that it has benefited from his constant attention and is in above average condition (new roofs, carpet, etc). 

This was not listed for sale, but came my way after I called a local property management company to introduce myself and tell them I was looking to invest in 4 plexes (thanks BP for that suggestion!). That gal was the daughter in law of the owner. Before the day was out I was talking to this owner.

As I mentioned, he's juggling too many properties and these three represent a partial pruning of his tree, so to speak. He's got a 7o-acre neighborhood full of SFRs he owns and manages as well, and I think he's just ready to start powering down in retirement and doesn't want to mess w realtors, showings, inconveniencing tenants during showings, etc. 

I'll be researching the sub2 suggestion and forwarded your ideas to my lawyer. Thank you again for the great suggestions! I'll keep you posted.

Brett

Thanks William and Jeff --- I'll look into that! Thankfully the tenants pay all of their own utilities on this property.

Thanks Wayne, I'll definitely look into that. I agree, need to get some ownership stake and push for a refi situation down the road. I think that's a good strategy.

Hello! I'm looking at an interesting investment, but I need your advice on how to seal the deal.

I'm talking to an elderly gentleman in his 70s, who still manages 100+ units(!!). He wants to make me a "sweet-heart of a deal" on three 4-plexes he owns. They are in great shape and rented out. He simply wants his time back and is ready to get out of the game, as he puts it. I would take over the day-to-day management and basically everything to do with them. As he put it, he wants this to work for me, because he "doesn't want them back!" It would be owner-finance in the sense he offered I simply take over his payments with US Bank - sort of a "wrap" loan agreement...

He is offering to sell these to me for what he owes. He bought all three of them in 2008 for $235,000 each. He now owes $174,000 on each 4-plex. I had one appraised (they all sit right next to each other), and the appraisal just came in yesterday for $233,000 per 4-plex. He has a sweet 30 yr note on these, so the mortgage is $800 per 4-plex per month (three 4-plexes x $800 = $2,400 mortgage payment). The 12 apartments rent for $500 each, and are all rented out (monthly gross $6,000).

I have a day job and would like to just bank back the proceeds for maintenance, to pay down the note, etc.

So the rub on all of this is: he still owes $174,000 on each unit. Although he is offering to let me "just take over his payments" the note is of course not assumable (per US Bank loan doc). Additionally, for me to refi these onto commercial notes would mean higher monthly payments, and my commercial lender would also want 20% down and for me to have a minimum of $36,000 in the bank in reserves to cover a year's worth of mortgage payments (which I don't quite have right now).

So even if I wrote up a contract to purchase them and refi them, my bank would look at purchase price for the loan, not appraisal, so I'd have to come up with 20% of $174,000 for each one just to get them bought.

I talked to my lawyer about setting up an LLC of some sort, and the lawyer was scratching his head on how to structure this. I've been reading up on a master lease with option to purchase idea, and perhaps that's the way I need to go.

Any suggestions on how to structure this partnership would be greatly appreciated!

Brett