All Forum Posts by: Chadd Naugle

Good points, the roof was a concern, and I will definitely have a good home inspector go through it.  He just verbally accepted $80,000 for the the property.  He is going through a divorce so he is motivated.

Okay this is an odd ball.  I seem to find these oddball deals - Anyhow the property is an old grocery store that was converted into 3 apartments.  However it is zoned as residential 3 unit, yet it would never be classified as a "house".  It is located in an lower income development, which keeps the rents low.  

Price is $89,000 - Monthly Income $1545

Cash ROI = 41%

Total ROI = 47%

When I look at the numbers it seems like a no brainier with these kind of returns, but I also am thinking I am going to have lots of turns, and headaches.  The units look in decent shape, just all white walls, decent kitchens and bathrooms, but definitely not luxury appts.

I figured I would get no appreciation, and was okay with that, since the cash flow would be between 600 and 800 a month, with a relatively small investment. The difference in cash flow is with or without a property manager.

Thoughts?  I know I am not supposed to buy junk, but this is probably somewhere in between...Not really a value play, just a solid cash flow scenario.

Okay this is an odd one... I am trying to determine value so I know how much I can get from a lender.

This building was once an old grocery store in town, it has been converted to a 3 unit apt building.  I can't use residential comps, because it is not a house.  All units are currently rented.

So how do it determine value so I can get a loan.  Do lenders base the value on cap rate?  

The NOI is $14,900 per year so at 10% cap it would be valued at $149,000. But I am not sure what banks use to determine value, so I don't know what the LTV would be because I don't know what the value is. I feel like a dog chasing my tail :)

Does anyone see a problem of getting funding for $95,000 based on these numbers? or what type of loan or funding, I should try and apply for based on this scenario?

Thanks in advance.

What you really want to do is find out why they are selling, what is going on with them....are they moving, divorce, was it a rental before and they are retiring, etc.  Find a problem, then offer a solution to the problem...if you need them to carry paper and they need all cash, it is not a win win, and move on to the next deal.  Keep in mind you have a lot different tools available here, and creativity is key.

I always ask if they have a mortgage, and what they need to get out of the deal cash, this will prompt the conversation, and then you can go from there.  

A couple of things you can do....aside from the above mentioned.  

First figure out exactly what is causing the credit issue, and work on fixing it.  There are many things you can do to repair your credit, "IF" you know what is wrong

Secondly you could do a lease with an option to buy, so find a seller that owns a property outright,  and try and work out a deal with them...these are not easy to come by, and will take some work, but it is another tool, in the toolbox.

Has anyone used this source of funding?

Here is the deal - Package deal 10 Single Family homes with 12 units total.... the seller is asking $580,000 for all homes.

Monthly Cash Flow is $8750

Yearly taxes - $15135

Motivated seller, but not going to give it away....

Looking for $500,000 in financing...Let's talk.  We also have the ability to break up portfolio and cherry pick the deals....

Here is the deal - Package deal 10 Single Family homes with 12 units total.... the seller is asking $580,000 for all homes.

Monthly Cash Flow is $8750

Yearly taxes - $15135

Motivated seller, but not going to give it away....

Questions - How do finance something like this?  Seller said there would be two closings, because he has two bundled mortgages.

Basically looking for a creative solution to get this deal done....he is open to negotiation on the price....I was thinking of trying to get ONE loan for the 80% LTV, and have him seller finance the rest, but I think he owes $470,000 on the property.

Other option would be to get a private investor to put money...any thoughts?

Thanks for all the replies, you guys are great...

Yes I am brand new to this, aside from buying houses that I lived in, I have not bought a house as investment yet...My goals are to acquire rental properties to build wealth and cash flow.  However since I do not have much capitol to start with, I may need to start with flipping or wholesaling to generate some cash, so I have down money for rental properties.  

I came across Bigger Pockets in my quest to learn as much about this business, as I possibly can before I start jumping right in.  This community seems really helpful and forth coming with information, and I love what I have read so far.

Since my strategy is "buy & hold" and I do not have much starting capitol, so I was looking for creative ways to do no money down financing for long term rentals.  

Also I am thinking about getting my RE license to make money on deals, help people and have the tools that realtors do, not to mention that it will probably decrease my learning curve substantially when trying to structure a deal for myself.

Look forward to engaging with like minded investors.

Chadd