All Forum Posts by: Christian I Presant

 Hey Christian,

I have a feeling you're going to have a tough time getting the lender to lend if they know it needs a new furnace. Does the current one work? I'm wondering if you could offer them $110k and have them do the repairs first (some contractors will wait until close to get paid or offer financing) and ask for 2% in closing (what seems to be the most conventional lender will allow on investment). Most conventional lenders won't allow repairs to go into escrow. You could potentially bump up if you needed to, but having someone else do the work could be good and the lender will prefer having a higher mortgage amount. :)

What are you using for financing? If it's cash, ignore the next parts. :)

Is it possible to wrap the rehab into the mortgage? See if the lender will allow money to go into escrow for some of the bigger repairs. If not, then see what amount the sellers can contribute (likely 2%), or see if they're open to having the furnace replaced by a contractor that will take payment from the sellers' proceeds at closing (and add the cost onto the purchase price). 

I think you're saying you can bring in $24k per year. Seems like there's a good potential for delightful ROI assuming there aren't other "crazy" factors and you can put a limit on utilities. :) Is the duplex metered separately? If so, then it seems like tenants could put them in their name and work out the split. If not, I would put a clause in the lease that utilities for the building are expected to be a certain amount. If they are over, then the overage will be equally divided among all residents. (If that's legal where you are.)

Christian, 

1. Get a certified professional to quote replacing that furnace. There are specific laws for asbestos, and you don't want to cross those boundaries.

2. Do your due diligence. Know your numbers inside out. Get the HVAC quote, hot water heater purchase / install quote etc. In some areas a master plumber has to install a hot water heater. That could mean a $1500 bill; since you plan to rent this out you don't want to take a chance of it being installed wrong or the temperature being set too high.

3. Who is currently renting it? Is it students? I had a broker send a multifamily offering to me advertising it as student housing. I called a friend who grew up near and worked on that college campus. He said students wouldn't live in that complex although it was 2 miles from campus. 

Due diligence can save you a lot of time and money...just because it glitters doesn't make it gold. 

4. Let's say the numbers are close, and you can rent it to students. Ask the seller for some concessions. $ towards the HVAC / Hot water heater replacement etc. You don't know until you ask. All they can say is no.

5. No deal is better than a bad deal.  

Good luck.

The lender dictates what closing costs are involved in owner finance. Some charge points, some don’t.

@Christian I Presant

get an agent and they can walk you through everything.

Prices are much cheaper.