All Forum Posts by: Eric Van Deman

Hi Adam,

I’m also from the Denver area. If you would like to reach out and connect, I’d be happy to share a couple commercial lending contacts that may be able to help you out. 

Kind regards,

Eric

I would walk away.  With that small of a town and a shrinking population, my guess is that future appreciation will be non-existent.  The second reason I wouldn't like the deal is the low level of rent (just $550 or $600/mo).  All of your maintenance will be a much higher proportion of your rent (e.g. replacing a stove costs the same whether rent is $550 or $1,000 or more, but wipes out of a month of lower rent vs. just representing a portion of a higher month's rent).  If I were in your shoes, I would focus on an area with a higher population and positive demographic trends.  

Having said that, the property will likely cash flow once all 4 units are full...so depends on your goals.  Good luck!

Congratulations!  I like hearing positive stories like this. Keep it going!

Hi @Christina Kokologiannakis,

In moving from a single-family to multi-family properties, I would recommend that you look into the lending requirements in the multi-family space before making your decision as there might be some other actions that you would want to undertake before you sell. If your plan is to find a replacement property or two that is 4 units or less and qualifies for residential financing, then there is probably not much to do with your current investment structure. However, if you are planning to find a replacement property that is 5 units or more, you'll get into the commercial lending space. Commercial loans are more commonly granted to LLCs and one of the 1031 requirements is that the relinquished and replacement properties hold title in the same name, which may require you to transfer the SFH into an LLC before you sell it. There are also some basic requirements for a commercial loan being the borrower's net worth is higher than the loan value, DSCR typically above 1.25, and certain reserve requirements. If I were in your shoes, I'd reach out to a commercial lender and a 1031 exchange intermediary before you put your SFH on the market to ensure you'll be able to follow through on the back end. And I agree with both Bryan and Jake, the timelines are tight, so start early in searching for your replacement property.

Reach out to Krista Goodrich, who is a BP member.  I'm not sure if she is accepting new clients, but she is AWESOME!

Hi @Kyu Kim, I've done this before and the best part of it (in my view) is you can lock in low rate 30-year fixed residential financing on each of them separately while still having a larger complex. The downside is you would initially purchase in your name instead of an LLC to get the residential financing, but could quitclaim them to an LLC down the road. If that option isn't attractive to you, a lender could definitely still underwrite and put together a loan package for all of them as a commercial loan. Best of luck!

Rosie Smith with RS Property Management managed a 16-unit property for us for a number of years and did a great job.

Congratulations @Jerryian Francois!

Keep it rolling!

Looks like a fair list.  I’d be prepared for a little bump in taxes and insurance on purchase, then add a little buffer for replacement reserves, but it looks like you have a good deal on your hands.