All Forum Posts by: James Chambers

I have come to within 3 months of my balloon payment of my loan and I'm looking for more creative options till I can secure more longer-term financing. 

24 unit complex

estimated value 1.5 million

Money owed:  897k

Located in Kansas small town

I was told this might be an option for a multi-family property I was looking to purchase. traditional financing is in order but I'm trying to see what the pros and cons are for the NNN lease with option to buy. I plan on putting down my down payment for the lease also.

I was told that i would first get into a NNN with the seller for the financed amount then get into a JV-LLC for the portion that the seller was going to initially carry.

What are the benefits for the seller?

What are the benefits for the Buyer?

If you need more clarification let me know. I'll try my Best. :)

property is 1.1 million with 300k seller carry. 700k financed. 

@Andrew Johnson Thanks for that reply. That was definitely some food for thought. I actually made an error and the NOI was 99K. I plan on managing the place myself. I have Freee time. lol.

Regarding the 5 year balloon I addressed that issue with my realtor and the seller is going to be a lot more lenient on that balloon payment before we get to signing papers.

100k is what was required to get into the deal. I wont be wiped out after this but I would like to keep as much of my cash as possible.

Question.  If I do repairs, fix up the place, and raise rents slowly how will the banks go about valuing the place? Will they use the same cap rate I got when I purchased the place? 

The place also has a large storage building that I planned on converting to  storage units for the residents in the next year or so. Hopefully that brings up the income.  

@Matt K. it is on the outskirts of Wichita.  Nothing new in the area as far as I can see.

@Account Closed the leases are annual.  the previous owner also had 4 units that he gave  school year leases too. The apartments are 2 bed 1 and 1/2 bath. He rents those for 350 per bed plus elec.  Also I plan on doing most of the managing because its 10 minutes from my home.  I'm self employed so I have flexibility. I was thinking of raising it about 25 to 50 dollars. no more than that. 

Thanks for the response. I appreciate it.  I was thinking about raising the rent is about six months. More info:  The town the aprartments are in is smaller. it has about 15K people and the town thrives around the school. so I was thinking that I could do the improvements while it was full and just raise the rents as people move in and out.  The inspection didn't say anything was wrong with them but I personally have not seen them. 

So I'm new to the multi-family arena.  I spoke to a few agents and brokers and let them know my interests and what a had for a down-payment and  this off market deal was presented to me:

24 units selling for 1.1 million.

seller is carrying 300K @5%  with 30yr am and a 5 yr bubble payment

100k from me

700k for bank @5.24 with a 25yr am

$600 a month with a 92% vacancy rate annually. Its near a college so the summers it usually has a few vacancies. currently 100% occupied since school is in session. when I first got the info it had four vacancies in July. rent hasn't been raised in 9 years. 

the Current NOI is 113K

built in 1976 buy the guy selling. Currently 80 something and is willing to stick around to help since he lives on block. Property is in need of mild repairs. The gutters, landscaping, and sign fell down a few years ago and he never put it up.  parking lot is the same since inception s its all spider cracked and the cement sidewalks are cracking also. The HVACs are the same since it was built. that have been well taken care of but.... Inspection said they were in good shape. roof was replaced 3 years ago on both buildings. 

Any advice? Questions? I'm a firm believer in you don't know what you don't know so I'm looking for outside analysis. If you need more info let me know.

Thanks James C.