All Forum Posts by: Eka Linwood

I am working on my first deal, a triplex in Grandview with Fountain Mortgage and they have been great! The properties are about $75k each, but I'm doing FHA loans with 3.5% down. Their interest rates were also much lower than their competitors. Let me know if you'd like me to send you their contact information.

@Pat L.

That is exactly what I was thinking! Let the Seller decide to get back to us.  We can come back to the table to re-negotiate.  I didn't quite understand your comment about the 12% note though...

@Jonathan Greene

Thanks for that comment - I am prepared to walk away but I do think that the cash flow would still work even if the Seller doesn't address ALL of the inspection items. The wooden beam, for example, is something that I will not compromise on and will want the seller to repair.

@Marc Winter

That's a great point - I did hesitate on that and would probably be fine with getting the termite treatment myself but since there's a current issue on termite damage I thought it's reasonable to ask.

@Brian Pulaski

I have only shared the price estimate with my buyer's agent and haven't talked with any contractors yet so I have estimated fairly high (about 18k for all inspection items).  I would rather not tell them what I can accept as a "give back" if they repair nothing though - ideally, this number would come from the seller as a counter.  Is this not the typical practice?

@Jonathan Greene The Seller has not made any statement that this will be an "As-Is" transaction.  I completely agree - I don't mind splitting the difference in half and take them in credits instead.  In fact, if the Seller doesn't address these issues - I intend to address them myself when I am occupying the units.

Also, the units are currently completely rented out so the Seller is probably in no-rush to sell and probably trying to get as much money from the transaction too. I don't mind paying a fair price but I am afraid if these items are not addressed, the FHA appraiser may take issues on some of these.

A little history on the transaction - a Triplex with asking price of $235k, I offered $215k and the seller has countered with $225k. They have been trying to sell since May 2019 and initial price started at $295k. The Owner is on the board of HOA for the property. I accepted the counter and put in the earnest money of $1k. This will be an FHA loan so anything safety-related will need to be fixed prior to the Loan's closing.

I had a home inspector came in on Friday and the inspector provided an extensive list (40-pg) long.  I intend to waive the minor inspection items (such as creaking floor, handrail bolts, etc.) but I was hoping that the Seller would be able to repair the following list of items:

14012: Replacement of decayed siding as identified in inspection report (at southern façade and above the evergreens around entrance). Soffit damage due to woodpeckers to be repaired.

14008: Install beams to prevent further movement, and seal basement

14012: Replace wooden beam due to termite damage (located overhead, by stairs). Need termite treatment to prevent future infestation.

14008: Repair cracked rafter

14010 and 14012: Replacement of damaged shingles.

14008: Remove clog from vent pipe

14010: Address orphaned water heater vent pipe to prevent damage to flue gas line and/or chimney

14008 and 14012: Install proper venting system for medium efficiency furnace

14012: Repair cracked kitchen window.

General: Retaining wall failure to be repaired (or documentation of HOA's responsibility)

In addition, the Seller's disclosure has indicated that the HVAC system is 2-years old "newer".  The inspection indicated that the HVAC system is "newer" on only ONE of the THREE units.  The other TWO units are 15-20 years old for both the furnace and the AC.  I asked for $4,000 credit to the closing cost due to this.

At first glance, my Buyer's Agent mentioned that the list is pretty reasonable and she asked for the amount of credit I would like on the transaction.  I shared with her some price estimates on the repair items and she changed her tone to say that the list might be too extensive and the Seller might walk-away from the transaction.

I wanted a second set of eyes on this list to get feedback on whether they are too much to ask of the Seller?  I would hate to walk away from this deal and admittedly, some of these items I can probably do myself after moving in (like finding a new vent route for the furnace).

We were just looking at a property in Grandview, around 140th and the 71 Hway - Triplex with 2 x two-bedroom and 1x three-bedroom units.  The two-bedroom was renting at $825/month with water and sewage included on one-year leases.  The three-bedroom was being rented at $790/month on a month-to-month lease, which I think is weird (lower rent and less favorable rental term).  The area was pretty quiet and we were hoping to owner-occupy but wasn't sure if the property is safe in this area.

I was just wondering though - how much is the cap rate in Ray Town and is the rent to price ratio reasonable in Raytown, if you don't mind sharing?

Thanks for the responses guys! I ended up reaching out to a couple of local lenders in the area and ended up being pre-approved for the FHA loan through one of the lenders who are willing to work with triplex. The mortgage limit is kinda low, but this works!

I was wondering if anyone has any recommendations for a Lender that is open to work with triplex / quad-plex?  My current lender is currently only open to duplex and having access to Triplex/Quadplex will allow me more options to choose from.  Now that I am thinking about it, a triplex may actually work out better for me since the vacancy risk will be diversified.

I was also under the impression that only FHA will work for downpayment less than 20%, but I have just heard from someone that some conventional loans may work with 5% down payment too. In this case, the conventional loan may actually work better for people with high credit score - is this correct?

I am looking for a property in the South KC region but have also heard that lenders are sometimes concerned about being out of state.  Would a lender based in KC-KS typically be concerned about financing a property in KC-MO area?

@Dan Krupa

You're right - no one knows about where we are at the market cycle.  I think that is what I meant by being bearish though - the market property price right now is probably high and is due for a correction.  I guess I was hoping 2020 would be the bottom of that price correction, but who knows...

I just got started, and looking at the MLS in the area right now. Not that many 2-4 units multi-family being advertised though. I have read that most deals (and the best deals) actually happen outside of the MLS. Is this true for KC/OP too?

If you are looking for quotes for Solar PV, I think SolarHood can probably get you a few quotes from the local Kansas City contractors.  They have some "Group Deals" and calculators that can help you forecast savings from solar pv installations.