All Forum Posts by: John B.

The property is in a small, somewhat touristy town in Colorado. It sits on Main St and is a two story commercial building. Four storefronts renting per YEAR at $8,400 (until 2021), $13,200 (2026), $5,280 (2019), $3,600 (2027), and multiple currently vacant offices rentable at $25,200/year if fully rented. That makes a total potential yearly income of $55,680. The yearly expenses reported are $500 for repairs/maintenance, $7200 in utilities, $960 in insurance, $2970 in property tax, and $500 in miscellaneous. That makes the total yearly expenses $30,590. (Do these expenses seem low?) I've negotiated some and the last counter was a sale price of $515,000; with 20% down ($103,000), and seller carry financing at 5% interest rate amortized over 30 years with a balloon at 5 years. The potential with the property: the rents are 40% below market, the office space could be turned into residential and command steadier rents at about 30% more - that would cost about $150,000. There is room to add a rooftop deck that could be rented out at approximately $10,000/year. 1. Are those expenses consistent with commercial buildings like this? 2. Do the price and terms make this a good deal considering the potential of the building? 3. What should I do?

Any help BP??

The property is in a small, somewhat touristy town in Colorado. It sits on Main St and is a two story commercial building. Four storefronts renting per YEAR at $8,400 (until 2021), $13,200 (2026), $5,280 (2019), $3,600 (2027), and multiple currently vacant offices rentable at $25,200/year if fully rented. That makes a total potential yearly income of $55,680.

The yearly expenses reported are $500 for repairs/maintenance, $7200 in utilities, $960 in insurance, $2970 in property tax, and $500 in miscellaneous. That makes the total yearly expenses $30,590. (Do these expenses seem low?)

I've negotiated some and the last counter was a sale price of $515,000; with 20% down ($103,000), and seller carry financing at 5% interest rate amortized over 30 years with a balloon at 5 years.

The potential with the property: the rents are 40% below market, the office space could be turned into residential and command steadier rents at about 30% more - that would cost about $150,000. There is room to add a rooftop deck that could be rented out at approximately $10,000/year.

1. Are those expenses consistent with commercial buildings like this?

2. Do the price and terms make this a good deal considering the potential of the building?

3. What should I do?

I bought a home with a conventional mortgage 10 months ago with 20% down. I have now found a fourplex that I would like to use FHA financing on (& use as my primary). However, my lender has told me that I cannot even apply for a FHA loan until I have owned my current house for 1 year; and that this rule was set by Fannie. I've read the FHA and Fannie Mae guidelines and cannot find this rule in there. I've called their helplines and they hadn't heard of this. I understand the borrower must commit to live in the property for 1 year but cannot find anything anywhere about the 1year requirement my lender speaks of. Is my lender confused? What's the real deal?

I just wanted to renew this thread to current times. What is the current status of the seller giving concessions on FHA loans?

I found this thread because I am considering buying a fourplex with FHA and am trying to better understand what I could negotiate from the seller - it is FSBO and I am buying w/out an agent. If it helps, the property is in Western Colorado which is just recently recovering to a good real estate market but nowhere near the hot market of the Denver area.

I'm interested in a multi that currently has 5 units. It is listed as having 5 units on the county property website. If I wanted to use an FHA loan (3-5% down) and house hack it, how would I be able to do so on this property?

Would the current owner have to change it to 4 units before I got qualified for the loan. And, if so, how would they have to change that, would adding a doorway between the units work or would they have to have reclassified through the county as four units?

Or, could I just intend to use the 5 unit as a 4 unit?

Thank you @Bill S. that is good to know.  

@Ralph R., what are the financial requirements of the owner or do you know where I could find them?

As I seek out these deals and have conversations with the owners I find that many times they have never considered the option before but the more I tell them the more they get interested.  However, a lot of times the questions they ask I don't know the answers for - yet.  Finding out if the owner is qualified is probably something I will have to do in most circumstances - if they aren't it wont be worth my time to negotiate with them I figure.

@Michelle Zarlengo ,

I am wondering how this turned out for you.  I am also looking to pick up owner financed properties like @Sheena Blankenagel.  I've never done one but it seems beneficial to both parties by cutting out the fees for the buyer and providing monthly income to the seller.

What did the final contract look like, what terms were used, and how you worked through that process? 

Did you use an attorney or a mortgage originator to write it out?

What kind of regulation, either Colorado or Federal (Dodd Frank), is there on owner financing?

Does anyone have examples of the owner financing contracts that they would be willing to share?

@Robert Herrera

A friend of mine (honestly), lets say Jim, in Milwaukee hired D & G Xteriors, LLC to side their house. D & G Xteriors worked with Jim's insurance company and got the insurance company to issue a check to Jim. Jim paid D & G Xteriors with a contract that included a lien waiver. D & G Xteriors got his materials, $3,000 worth, from Richards Building Supply but never paid them. Richards Building Supply has now given notice to Jim that they intend to file a lien on Jim's home in 30 days.

What is Jim's remedy?

A friend of mine (honestly), lets say Jim, in Milwaukee hired D & G Xteriors, LLC to side their house. D & G Xteriors worked with Jim's insurance company and got the insurance company to issue a check to Jim. Jim paid D & G Xteriors with a contract that included a lien waiver. D & G Xteriors got his materials, $3,000 worth, from Richards Building Supply but never paid them. Richards Building Supply has now given notice to Jim that they intend to file a lien on Jim's home in 30 days.

What is Jim's remedy?