All Forum Posts by: Ess Dee

Interesting, but isnt the IRS capital gains tax like 40% anyway? so would this be on top of that tax or, actually we are getting the better deal as foreigners? 

If by rooming house you are referring to a welfare/seciton 8 than no It is not, but two of the tenants are on housing. 

The figures are as follows:

Asking Price: 120k (will be brought down)

Net Operating income - $20,088.00

Total expenses - $10,201.96 (maintenance still to be given)

Downpayment 10% = 12,000

Less 5% Loan - 6,957.24

NOI: $3,244.72 - a 27.04% return at $271.12 cashflow a month. (THESE ARE ALL ESTIMATES UNTIL I GET MAINTENANCE COST THAN I WILL GIVE NEW OFFER)

Also take into consideration this is not so much a 5 plex conversion, it acutally seemed like an apartment building but just a very old one from the 1900s. Everything was separated perfectly. Its just the quality of tenants im afraid of. Your advice to have the one i dont like removed by the seller is a good idea. 

EDIT: also Aaron, the sellers reason for selling is she was pretty old and wants to retire - Vacation type get out of boring Nebraska money. She has no mortgage left on the property.

Some of you may recognize me, I posted in the forum regarding trouble securing financing in the USA as UK resident.

I found some deals offering seller financing. One in particular, a five plex... If I purchase this, it could get me in the bag with private financing in the future (most require you to have some kind of portfolio usually five doors).

I visited the property today. The seller is a nice old lady who maintains and manages the property herself. With some negotiating, i could create a positive cash flow of $400 a month (from 1300 rent). Asking price is 120k, but i think its worth no more than 100/110 with my calculations. Cap rate is still being figured out, likely close to 10.

However my question is this. The building is from 1900s, the neighbourhood is a low income one, and the tenants are.. Lets just say they arent your happy jolly family types. 3 out of the 5 treat it like their home. Very well kept. HOWEVER one is part of some rehab program and I couldnt even find a bed in there.. he hasnt trashed the place but I basically came in he had no shirt on, skinny as hell and seemed like he was seeing stars. The 5th tenant was a mother upstairs, lived in a friggin pig sty. kid running around, garbage everywhere. definitely on drugs. She was friendly (welfare mum), but it looked like section 8 (i think you americans call it) housing scene. 

Is this still a good deal? Should i judge solely on cashflow or also by the tenants im inheriting? Not to sound heartless, but can i evict the ones i want out for being so damn filthy before their leases run out? 

Even if maintanence costs are low, im assuming getting rid of some tenants and fixing the place back up and getting good ones in will put me in a negative cash flow for six months at least. Or.. if it aint broke dont fix it? Just collect my rents and turn a blind eye.

What do you guys think?

Thanks for your input! Very helpful.

What if I am purchasing a 3 unit property and then owner previously paid for these bills? Would that indicate I have too also or can I creatively move these expenses around? Also, would it cost a ton to create three switches for all three units?

How would you go about doing that kind of survey? Calling some management firms?

interesting, thank you all for your answers. But that brings me to another question! What about water and other utilities? Is it all down to the factors you have all described? Even trash and sewer. 

Answers would be appreciated.

Ive been running some numbers on some multi family deals and single families also. I was wondering, when do you guys decide if you should pay for the gas and electric bills when trying to adjust for a higher cashflow? Is it soley based on the structure of the multi family (if each unit has its own meter or not) or are there other factors coming into play?

I obviously would rather have the tenants pay but, would that make my rental less attractive? Let me know what you guys think :)

Dee

 He has yet to give me a rate, but likely 5% over 30 years. He wants 20% down however.

I just ran the numbers and I would only get a decent return if the seller gave me the property for $75k... and that would be with 10% down making just under $100 a month. Hazard insurance and management is bringing me down. I would have to do some heavy negotiating but I doubt this is a good deal. 

I will probably pass (unless you think I can make it work) but your advice on a credit score being built is interesting. Are you saying if I owned the property (under an LLC) I would have a US credit score? Im amazed right now. That would fix so many issues as a UK investor Im having right now!

 Thanks for the prompt reply Lucas and kind words.

My concern is the balloon payment. Once it is due in 5 years I need to refinance the property and pay off the seller correct? What is the best way to do that as a foreign investor in the US? This is my conundrum 

I have an opportunity for a seller financed deal on a triplex. The seller naturally once the property on a balloon payment after 5 years (92k, I think i can bring it down to 80k but that's another story).

How would I go about doing that without a traditional lender? And if a private lender can help, how would that work?

I can imagine after paying property taxes for 5 years there must be some kind of leverage with a traditional lender in obtaining a refinanced loan? 

This would be my first deal btw so I am trying to make sure my strategy is correct. Im also only interested at getting more than 10% cash on cash return from rental.