All Forum Posts by: Damien Hall

Is there a way I can value an apartment building that doesn't have any financial stmts? A building in my area is on the market but it has been vacant about 8 years so there are no financial stmts to view. I think the building is overpriced. I think the seller is asking that much because it's located in a nice area. But I can't justify an offer on that.

Should I base the value off of proforma stmts? I'm a little weary about that so I wanted to know how to get a good valuation.

Also, the building needs to be rehabbed. I have an appointment to inspect it so I will know how much work needs to be done at that time. And this will affect the offer price.

My colleague requests aren't updating. When members accept my request, it doesn't reflect in my profile. I see that the pending request is removed and when I look that their profile I see that I am added as their colleague. Is this on your radar?

Josh:

You can lookup Lease Purchase agreements on www.uslegalforms.com to get a feel of the elements of a lease option contract. And of course, consult a RE attorney to make sure your contract is up to par.

Since your first priority is to sell, your ad will basically be the same as any sales ad. But include in the ad that a lease option is available. You can include the monthly lease payments if you want ( I would as it might narrow your offers to serious buyers). Also include the intent of the current tenant, are they staying or leaving. If the tenant stays then that will have to be worked out in the deal.

Once you get the prospective buyer, you can discuss the length of the exercise period and the exercise price. Or you can include all of that in your add, once again narrowing inquiries to serious buyers only.

Good luck!

Dave:

You are right that a cash out refi would decrease cashflow. You would only do it if the income from the building could sustain the increased mortgage payment. Besides, the lender won't do the refi if the new loan drops the debt service ratio (DSCR) below their requirements.

For instance you locate a building and during your due diligence you see the potential to increase rents and decrease expenses by making some repairs. This will increase NOI and increase your DSCR. So if your strategy is to refi, you calculate how much you can take out without a negative effect.

Your strategy will be to build capital either thru rental income which can take years or to get cash from a refi. This is the benefit of doing a refi as soon as you can.

If the property appraises high enough, you can pull cash out through the refi. This will give you tax free funding without having to sell your property. You can put those funds into the next project.

Certainly no question is a stupid one.

MIke:

Was the author of the blog referring to a specific type of agreement and contract? As I understand, it there is no difference between the two.

In both, the consenting parties have obligations they have to fulfill. If the obligations aren't fulfulled, then the agreement and contract states the remedy.

Originally posted by Jon Holdman:

The fact you can't find any comps is a real problem.

Shi'mere, John is right that you have to make sure you find the right comps for the ARV. I had a deal once where I got the ARV wrong and it cost me a lot of money. And that was my own deal. So as a wholesaler it's imperative you get this number as close as to the true ARV as possible because it will make you more credible to investors.

Also how did you come up with the $16K estimated repair? I hope you got this number from a contractor (preferably one that is capable and ready to do the work) as, once again, it will add to your credibility. As much as you can give the investor already in place, the faster your deal will close. Good luck!

Cornell, the lender will most likely settle for stmts going back a year. I think three years will be optimal, but since you are the new owner you may not have the previous stmts. This also depends on the seller keeping good records. You can also validate the rent increases with lease agreements. That way the bank can see the improvements you introduced.

If you want the property appraised at a higher value then you will have to do the same with the appraiser. Make sure he has all of the current financials with support if needed. The only thing you can't control are the cap rates in the area.

Tim, My prayers go out to you and your family. May God bless you guys during this tough time!

Hey Renard! Are you still looking for a handyman? I may have a contact.