All Forum Posts by: James Nazario

Appreciate the warm welcome everyone! I am new to the game and my experience is mostly with home building and design. To see the numbers and calculating end of RE is a bit overwhelming although very exciting. I look forward to learning and offering any advice I may have as well.

Appreciate the response Bill!

I had appraisal issues to begin with because it was not common in the area, and there were no comps to go off of. That was the first issue with residential lenders.

The second issue was the simple fact that a separate retail space was involved. Another issue was that despite it was a legal non conforming property, given a fire or natural disaster the house could be rebuilt but only on the existing footprint and within a two year time frame. It was the two year time frame that scared off most lenders.

As it lies, the seller is financing for the first five years at 3.5% and increases every five years until fifteen years is met. Theoretically I should be able to refi before the first increase even happens.

I am aware that in order to claim rent for qualification it will take a couple years. That's the only thing holding me from getting a commercial loan.

I am interested as to why the retail would have to be a low/no public traffic. Is it because of the size of the structure? Or because it shares a property with a SFD?

This is my first post, besides my member intro, and I'd like to share my first and current situation. I am due to close on my first property and wish I found this site before I even started looking. Not to say I'm feeling regret, but I'll explain:
I am purchasing a two family home renovated from a cape, with one 2 bdrm 1bath unit upstairs, one 2 bdrm 1 bath downstairs. There are separate entrances, stairs have been blocked off and is all legal. It has a total of 1450 sq ft and is dispersed almost equally between the two units. There is also a full walk out basement for laundry access and storage for both units. There are updates that need to be made but as a whole the house is in great shape. I plan on occupying the downstairs unit for the first 2-4 years and move on from there.
I have a three car garage plus a covered car port for parking. What makes this property interesting is the fact that it also has a small 250 sq ft detached retail space in front of the house. The property is zoned commercial retail and spans .47 acres.
I could not get a bank loan for this property- residential lenders wouldn't lend due to its commercial features and uniqueness, commercial lenders wanted to see proof of rental history and cash flow. The house was family owned since bought new in the 1930s and only had family living there so no rental paper trail is available. The seller agreed to hold the note for 15 years with five year resets, while I make all efforts to refinance through a lender as soon as possible. So the numbers are as follows:

Purchase price: 105,000
Loan amount: 90,000
Loan term: 15 yr with 5 yr resets
Interest: 3.5%(1-5)5.5%(6-10)9%(11-15)
P/I: 643.39(1-5) etc.
Annual taxes: 6,800
Annual insurance: ~1700
Total monthly pmt:~1,345

I anticipate rents anywhere from 700-850 for the two units and have no idea what to do about the retail space. Originally the family ran a memorial art service out of it. It is placed on a main road so it has plenty of exposure, I just don't know what businesses to address.
Just looking for some insight on the situation but my main question lies mostly with the retail space; who to advertise the small space to? Would it make more sense to remove it completely and eliminate $700 of excess insurance? Or do I build onto it(if the town allows) and have more rental options. Please let me know if I missed anything and I appreciate any and all responses! Thanks!

-James

Hello BP!
I stumbled across this forum about a month ago, lurked around for a bit, and now decided I should get more active. Especially since I'm about to close on my first investment property! I'll start a separate post for that property as it is particularly unique and I do seek some advice on the situation. Just a quick background on myself; I'm 26 years old and I have been in residential construction pretty much my whole life, professionally since I was 16. I am currently working on commercial projects full time, however even with a retirement package, it's not something I'd like to rely on for financial stability and future wealth. Therefore, given my background in carpentry, I have turned to real estate investing. With the help from my wife, who has experience in interior design and an aspiration in home staging, we set a goal of obtaining several buy and hold multifamilies while simultaneously searching for occasional fix and flip properties. The multis would hold priority of course while the flips would come as we saw financially fit. I would like to achieve this within 15 years while maintaining my current career. I appreciate and encourage any advice that everyone at bp has to offer!