All Forum Posts by: Cyrus Hanson

Yeah Allan, I see your point. I get tripped up a bit when it comes to analyzing a situation prior to making a move. It probably would serve me well to simply get a pulse prior to anything else. 

My troubles here could classify as one of the various forms of RE analysis paralysis...   :)

I've been knowing a gentleman for around 3 years who owns about 40-50 houses in the area I'd like to purchase another duplex or triplex in. We are casual friends and chat about cars every few months or so via text. I briefly brought up the idea of him selling a house to me and he mentioned he had just sold one to a friend, so I know there is a possibility he'd let one go. 

I closed on my second multi-unit this past February and am still building up my savings to position myself for a third property, so I don't quite have the down payment needed to finance one of his houses conventionally. I didn't think of approaching him prior to buying my second property, but c'est la vie.

There are two possible options in my head:

One: Approach him about providing owner financing for one of the properties and work out a deal if we can make the numbers work. I know quite a few of them are owned by him free and clear. One reservation I have about this option is the risk of not appearing serious because I don't have a large enough amount of money to bring to the table quite yet. Also, if I approach him too soon I might ruin a future opportunity when I have more money to work out a deal with a higher chance of completion due to bringing more cash to the deal. 

Two: Wait until I have enough money saved then approach him with an owner financing inquiry or conventional financing for one of his properties. The risk here is him selling one of the properties to another friend instead of me, and me missing out on a deal. Also, maybe he simply won't want to sell later but is OK with the idea of selling sooner. 

I am leaning towards just creating a possible owner financed package to present to him in the short term with the amount of money I can afford to put down.

Please let me know your thoughts and ideas on this and if you know of another option here I am not seeing. 

Thanks!

Cyrus


 

I completely agree with Andrew B. On my first property that I purchased FHA there was a severe hail storm 2 weeks later that did $25,000 in damage. Insurance covered all but $8,000, but I still had to come up with that money within a month's time. Luckily I did have some reserves ready to cover the unexpected expense.

That sounds great Evan. Yes, I've heard a bit about the commercial building code requirements once you get to 3-4 units instead of just 2. Keep us updated on your progress with this effort, very interested to keep hearing about it. 

Evan, how is this going? Did you ever have a call with the city official? I am really interested in doing the same thing in Minneapolis. I keep reading people saying the rezoning is such a hassle but that doesn't mean it can't be done!

Investment Info:

Small multi-family (2-4 units) buy & hold investment in Minneapolis.

Purchase price: $196,500
Cash invested: $3,000

Small multifamily home in high demand NE Minneapolis. 1 bed 1 bath upstairs, 2 bed 1 bath downstairs. Corner lot with oversized 2 car garage.

What made you interested in investing in this type of deal?

Realized I didn't want to pay rent and wanted a garage to tinker on old cars so purchased a duplex. I am single and don't have a family, so single family houses didn't appeal to me.

How did you find this deal and how did you negotiate it?

Found on MLS. Got in a slight bidding war due to multiple offers but numbers still worked well.

How did you finance this deal?

FHA

How did you add value to the deal?

Cleaned up the upstairs well. Rented out the better unit and lived in the smaller one.

What was the outcome?

Very well cash flowing duplex that I have moved out of. I still maintain use of the garage so I sometimes go over to tinker on an old car.

Lessons learned? Challenges?

Older houses generally have a bit more maintenance than expected.
Hail storms sometimes come 2 weeks after you close causing $25k in damage. This required me to shell out $8k to pitch in for repairs along with the insurance money.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

I worked with agent Heather Foss. She was excellent and responsive, I'd highly recommend her to others.