All Forum Posts by: Ilya V.

Thanks @Joel Owens , so it sounds like you are saying you need minimum equity in the property as long as you have cash reserves? I had not heard that in the past. How much equity do you need, in practice? What if you don't have $50,000 in reserves. (I assume that is proportional to the value of the property). 

Hi everyone,

I have heard two different things regarding obtaining bank financing for a Multi-Family property (larger than 4 units). One is that the bank will finance you based on the income that the property will generate rather than the raw value of the asset (as they do with primary resident properties). The second is that they expect you to take at least a 30% or so equity position in the property so you have "skin in the game".

I wanted to know if it is possible to get a mortgage for more than 70% if the property looks like it has better than average earning potential, or if that is a hard and fast rule.

Thanks!

Hi Scott,

Those are helpful with residential properties, but what if I am looking commercial?

-Ilya

I recently posted a question about a property that I found on Loopnet and one of the people commented "if it's on loopnet, don't bother, it means 100 other people have looked at the deal and passed it on"

Do you agree with the above? If so, where should I look for properties to purchase?

@Daniel Moore thank you very much for your very insightful comments and things to be looking out for, this will be very helpful. With these kinds of older buildings, this is what I would need to know. I feel like this is a bigger challenge than the neighborhood.

As per some of the other comments, I went down to the building and spoke to the on-sight manager. The area was not a war zone. I would say it is a typical lower-class community. I wasn't surrounded with boarded-up windows and graffiti. Those blocks are mostly residential.  He told me evictions were 1-2 / year and they get them out fast, when necessary. 

That being said, based on Daniel's comments, this may not be a low hanging fruit, but I suspect that for the experienced property manager there would be money to be made here. 

@Account Closed awesome resource, thank you! I will keep it handy to look for all other deals. 

Hi @Account Closed , thanks very much. Would you mind elaborating on the numbers a bit so I could understand them? Also, where do you recommend looking if Loopnet is not going to yield good results?

Hi @Scott K. , I don't have all the answers yet, I am just doing so preliminary exploring. I did drive past the area just now and I saw things I didn't like like houses with collapsed roofs and other unsightly landmarks, so it could explain the price a bit. From the map, I thought the neighborhood would be better because it was farther away from downtown. 

@Scott K. ,@Joe Villeneuve , help me understand - based on my math from above, it is still better to purchase this property rather than going to SFs. Am I not getting something?

Hi @Didi Siani , could you explain what you mean by profit being 12%?

Doing some quick math, I see rentometer is showing ~$525 average rent for this property. 

$525 x 22 units (81% of 27, assuming current occupancy) x 12 months = 140,000. If you assume 50% for expenses, it still comes to 70,000, which is about 26% of the $269k price. 

What am I missing?