All Forum Posts by: Chris Schmitt

So I’m looking at purchasing a rental property condo and received the financials.  My attorney and accountant disagree on the state of the property.  The balance sheet shows negative retained earnings to make the balance sheet balance. A debit balance in retained earnings seems concerning.  They also took out a 15 year loan for repairs and maintenance, and seem to have had some cash flow problems. However, they got a clean audit opinion, means they didn’t misrepresent their financial statements, and the report didn’t say “going concern”, which is what CPAs say when they think a business will likely go under, so that’s a positive. Also, the cash reserves, etc look alright.  Just curious if this is a deal breaker or sign that assessments or raising maintenance are on the way to make it balance? Currently the maintenance of very low which is one thing that makes it appealing.  

Yes, I found 2 buildings in the same area that satisfy my rent price, purchase price, HOA / tax / insurance formula. Most units are pretty similar. It took me a long time to narrow down where I want to buy, started looking in Myrtle Beach, then Adventura area and finally settled on Orlando and after a lot of consideration for my own situation found that a turnkey long term rental, though maybe not as profitable, works best. Now I am just trying to find the best deal. As I mentioned, I'm not in a rush and have a decent amount of cash so it's really just a matter of the right situation and timing. The rate hikes have changed the math a little but I wonder if the potential buyers leverage they present my offset the cost on a small mortgage.

Thanks for your reply, and local knowledge.  The condo is in the downtown Orlando area.  In your experience, is it an advantage for the buyer or seller if it is tenant occupied?  For me, as an investor, it makes things easier as I don’t have to find a tenant.  But for others I could see it being a liability for the seller since it is another contingency that must be dealt with.  Again, looking for whatever possible leverage I can gain. 

Thanks for your reply, and local knowledge.  The condo is in the downtown Orlando area.  In your experience, is it an advantage for the buyer or seller if it is tenant occupied?  For me, as an investor, it makes things easier as I don’t have to find a tenant.  But for others I could see it being a liability for the seller since it is another contingency that must be dealt with.  Again, looking for whatever possible leverage I can gain. 

Great advice, thank you.  The reason I am tempted to keep the current tenant is that it provides stability.  To me, 1200 bucks a year is worth not having vacancy, or someone not paying or destroying the property is totally worth it.  However, I suppose if that compounds over many years it bites into the profits enough to make a big deference.

It is posted on MLS. The realtor stated they believe it is listed close to market value. I have no problem borrowing and refinancing later if I can get a better deal now on the price but if things are going to remain flat for 6-12 months I might be better off leaving the down payment in a high yield account earning 5-6 percent. That's why I posed the question. I think a lot of "regular Joe's" are priced out at 8% mortagage and alot of investors looking for cash flow can't make the numbers work at those levels thereby eliminating alot of competition. As a long term investor with cash I just wonder if there is an opportunity to get a property 10-15% under list due to a lack of other interested buyers

I have been looking at purchasing a turnkey condo in the Orlando area as a long term rental.  I found a unit with a reliable existing tenant who wants to remain at around 100 per month below market value rent which for me would be worth it for the stability.  The unit is listed for about market value.   I can come in with a large down payment or even pay cash, though I would prefer not to.  My question is this - with rates spiking and deals in general grinding to a halt, how much additional leverage is there for buyers? I haven’t seen prices drop drastically but they seem to be “softening.”  What percentage under asking is fair in this market?  Or just wait and keep my “powder dry” as prices dip over the next few months.