All Forum Posts by: Christopher Pride

Multifamily with a house and 11 rentals.  House is VERY old but well built.  Would need some cosmetic (paint, refinish floors, minor repairs/upgrades completed by me). It has been on the market for over 100 days.  Realtor says another deal fell through because it didn't fit their needs for an event location.

We'd be coming in with 20% and look at about $10k in initial improvements.  This would obviously be contingent on a thorough inspection.

Asking price: 1075000

Annual Rent: 139k

Vacancy reported: 5%

Insurance: 5900

Maintenance: 10k

Taxes: 4k

Utilities: 15,600

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Total Expense: 35500

working on financing this week but I understand I'd be at around 6.5%

My biggest concern is DOM and major repairs needed. Rents can be increased. CAP from my calculation is +10% so naturally I am going to scrutinize. It almost seems...well...too good to be true hence the ask "does this make sense"

Any thoughts or your take on the deal would be so awesome.  You guys rock!

IMO you're asking for trouble and there isn't enough of a potential loss to warrant a response.  Move on.

It makes sense to do #1b but I personally would explore #2.  Give them an out now and balance the cost of that against them leaving the place wrecked leaving the non-op vehicle.  Get bids on the removal and cleanup, and compare that to a buyout amount.

Let me know if your pending deal falls through.  I might be interested in the package deal.

I'm fairly certain if he was required by probation/parole to register as an SO and he didn't, there will be a warrant for his arrest.  I would contact the PD/Sheriff and ask them what can be done.  It could be he is lodged and charged after which you can take possession based on abandonment/non-payment.

It's always a good idea to use an attorney but if you spend the time, read the laws it's a pretty straight forward process to evict on the grounds you stated.  How your rental looks when he moves out, well...be prepared for the worst.

Thanks for the input!

"Any chance for a vendor take back mortgage?"

Doubtful but that's an interesting approach. I am certainly open to the idea so I will keep that in mind and run it past the seller.

"what are average house prices in this neighbourhood?"
500k avg however that's single family vs this which is a multi with 6 units. Yes it's the nicest home in the area.  My emotional investment is in the money, not the property and I am coming at it from the "sales" approach and I am looking at it from an "income" valuation.  It's an absolutely gorgeous house, though so it's hard to compare it to the average stick home. If it were a dog of a property and still penciled like this, I would be equally emotional.

I am barking around an off market property and I want to jump on it. It's the first place I have seen in a while with this much upside potential.  Owner put out a "feeler" on a local Facebook group and immediately got bombarded by inquiries.  Mine was one of them and because we are just a small family, I think they want to sell it to us rather than investors.

I am interested to hear what others think, their methods to finance, tools they use and if they would go for it.

I might be able to bring some other financing from family but we currently have about 140k to put down (yes I know that's low). 

House is on the historic register, once a bed and breakfast, a massive 4 bed, 3 story Queen Anne Victorian, very well maintained with multiple rentals.

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Current Rents:

House: Basement Apt: Current owner occupies $0

House: 4 bed, former BnB, currently 1 room LTR, frequently STRs (travel nurses) 800

1 BR Apt: $1000

Studio: 900

Cabin 1br: 1000

Cabin Studio: 700

Current Gross Rents: 4400

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Potential Rents - All rents are currently below market*:

House: Basement Apt: Owner occupies $1500 ($0)

House: 4 bed LTR $2800 STR $5500+ BnB 20,000

1 BR Apt: $1500

Studio: 1200

Cabin 1br: 1500

Cabin Studio: 1200

*There is an addition attic apartment unused: 1200

Potential Gross Rents: LTR=$9400 - STR=$12,100

Tax:530/mo
Insurance:250/mo

Assumptions: Small family wanting to househack and come as close as possible to no monthly expense. We intend on holding the property indefinitely, doing minor improvements. High rental demand so good tenants. Rents are severely undervalued and several potential units are left vacant due to current owners situation. (age, well off doesn't need $)

Asking Price: 1.15M
Current Down: 140k

I am open to hear from lenders that can work a deal like this.  Let me know what you think and thank you guys SO MUCH in advance.  I truly appreciate any insight!

Quote from @Ryan Thomson:

@Christopher Pride did you land on a place to move yet?!

Not yet.  This market has us pretty nervous.  Every loan I crunched had us raising rents on the 3 other tenants to get even vaguely close to our numbers.  We're willing to kick a bit in each month but every multifamily we run has us paying close to full rent after insurance, taxes and expenses. Add to it the risk of another covid eviction moratorium and we're looking at a bad investment.

It's likely going to have to be a DSCR or other NonQM. I am open to suggestions, though.

Are lenders pulling back or am I just not shopping the right ones?

I have a line on a deal for a property that I believe is undervalued and has great future potential for improvement.  It follows the first 3 rules of real estate, is zoned "light commercial" which would include multifamily, the direction I want to take it.

It has a well established restaurant and 2 residences.  My plan is to move in to one while I work on other parcels attached, then develop the 2 residential lots for multifamily and/or STRs.

This has stumped several lenders who have told me "we don't do commercial, mixed use, etc"

I am at the point where I may need to pass because I can't seem to find a lender able to work on it. 

As with anything, numbers don't lie.  The property stops making sense at around an 8% mortgage.