All Forum Posts by: Brian Caruana

Thanks that's a great, I appreciate it!

Happy Holidays to all.

I have purchased a couple properties, 6 units over the past 12 to 18 months.

I am wondering if anyone has a checklist or summary for a routine walk-through on properties purchased with existing tenants.  I have been in almost every unit for initial intros and look-around to address known issues and both properties were fully inspected inside & out professionally prior to purchase.

I plan to get inventory of the make/model of appliances (in case of repair/replacement in future) and working condition.  Plumbing inspection in kitchen/bathroom to eliminate any potential water issues.  I don't want to create issues or expectations that aren't necessary...at the same time I know that if not inspected routinely small problems become big problems later and likely not covered by any of the security deposits.

I appreciate any experienced input, thanks!

Yes, that is a risk with commercial.  Somewhat new to this on the property side, but from experience with business loans, your commercial loan will be due and you will have to choose a refinance option or be prepared to pay off.  Most people start shopping for a new bank deal with plenty of time to manage the transition (12 to 18 months out) and at that point, you should have plenty of equity that you'll have several finance options, or if you've maintained/upgraded be prepared to sell the property and take advantage of appreciation if finance options aren't available that meet your needs.

Hello Jennie, relatively new myself but my initial experience with each is:

1. Traditional has nice terms and long term security, much easier to finance individually if you ever think you might want to sell one of the properties for any reason because it's time consuming and expensive to separate it later.  What I didn't like was the process, from application to closing it's a constant magnifying glass on your personal finances and spending which is a challenge in NYS with closing process experiencing significant delays.

2. Commercial is a heavy lift in the application stage but once the deal is underwritten, you're done, no last minute surprises because you bought a new living room set on a new credit card or made a college tuition payment :)  Also, terms can be negotiated and very favorable (extend the years or reduce the down payment for a slightly higher rate and if the numbers still work...hooray!).

Either way, good luck!

Investment Info:

Small multi-family (2-4 units) buy & hold investment.

Purchase price: $220,000
Cash invested: $40,000

Contributors:
Danté Belmonte

4 unit Home in Lincoln Park

What made you interested in investing in this type of deal?

Positive Cash Flow, BRRR Potential, Appreciation

How did you find this deal and how did you negotiate it?

Off Market working with Agent

How did you finance this deal?

Commercial Loan, 15 down, 25 year

How did you add value to the deal?

Raise Rent to Market, Upgrade infrastructure and external appearance on a 5 year plan still cash flow positive.

What was the outcome?

Cash Flow is positive immediately, basic self managed updates with trimming and cleanup while developing relationship with tenants. Section 8 supplements enough on 3 of the units at a rate that off-sets initial mortgage payment.

Lessons learned? Challenges?

Raising Rents on Long Term Tenants requires 60 day notice with section 8 (while not losing a good long term tenant).

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

@Dante Belmonte (Hunt Real Estate) and @Ben Mack (AmeriCU)