All Forum Posts by: Chiagozie Fawole

Hello @Shawn Ackerman, Yes, The owner is willing to finance - which is why I'm considering the deal. I considered the expenses in calculating the NOI. I initially used Zillow for the recent sales, but our property manager, who has access to the MLS, corroborated the information I got off Zillow. If I held the property forever then I won't have any concerns.. just wondering about what would happen if I wanted to refinance.

I am considering purchasing a package of 3 duplexes located in what I would consider a transition point between high-end ($500K homes) and lower end (30K homes). There have been no recent sales in the very neighborhood these properties are located, and I'm a bit stuck on what value to place on the properties.

With an asking price of $200000, and monthly rents of ~$5200 the CAP rate comes to about 16% - Normally I'll take that any day, but the prices per square foot of the closest recent sales, a few blocks down, would bring the value of these properties to range between $120K-$150K. The owner argues that those recent sales are in a very different neighborhood, and so don't count.

While I should cash-flow easily at the current price, I'm concerned about what happens if I decide to refinance or sell these someday.  

For small multifamilies, what strategies do you use when calculating the value?

This is Rochester, NY by the way.

Hello Vikas Kumar , Good to hear you're looking into Rochester. My recommendation would be to talk to property managers that service that area regarding vacancies. You would also want to consider how the current leases are structured, and keep in mind the school calendar. Regarding renting by the room, you would probably have to pay for utilities, and maybe even internet services. There's a pretty good podcast on student rentals (BP Podcast 140 with Bill Syrios).

That was fast! didn't you just celebrate 300000? Congrats!

Congrats!

welcome @Garth J.. I just moved to Rochester myself- loving it already!

@Omar Ismael oh wow. We are still in our first cycle of rent collections. As of the middle of last week 3 tenants were late - one with an explanation. One unit was vacant when we closed. That was filled last week. Thank God.

When we first walked through the property, there was an apartment that had "a lot" if people in it. They moved out before we closed. That vacancy was filled prior to closing.

@Corbin E. my partners are not silent partners. We gave each person a vote weighted on his/her equity position. The financing was based on our financial information. We let the bank know we were getting investors on board for the down payment , but the initial approval was based on our financial information. They required that anyone with greater than 25% equity be on the loan, so we structured our capital raise to keep each person less than 25% - just to avoid the additional delays of gathering the paperwork from them.

thank you! @Carl R. @Jessica Addison @Leo M Christensen

purchase price $353K; mortgage: 75% LTV amortized over 20years with a 10 year call. Interest rate fixed for 3 years at 5.79% ( we had an option for a lower rate, but it was going to be fixed for just one year and I didn't want to risk that)

my initial estimate of our out of pocket costs was ~103K, and we raised that, bringing the average investment to ~$20K. We paid taxes up front so the out of pocket costs are a little over that. For the out of pocket costs the investors get 83.3%, Each investor's portion being proportional to their contribution to the total amount.