All Forum Posts by: Joel Florek

@Nathan W. I have asked the owners if they would consider any type of owner financing and at this time that would be a no. Any advice on trying to turn that no into a yes?...

@Brad T.I have some equity built into my property and a few options that could allow me to get another $20k that I may be able to leverage, but thats not much($10k to $15K). If I can find a solution to raising capital then I will sit down the bank to see exactly what they would be willing to do. This is the largest of the local banks and does a lot with commercial loans especially on properties like this. Given the property and their experience with it and willingness to loan to these types of projects I anticipate 15% down required and terms near 5% at 20 years. Now I dont know for certain until I can sit down and discuss but I wont do that until I know that I have a few possible options to work with in my back pocket. 

First, some background info!

I bought a 4plex in my small town in the upper peninsula of Michigan earlier this year and things are going great with it. Just finished renovating my only vacant unit and had 3 calls on the first day posting it for $700 plus electric. I will have a tenent in at the end of the month given everything checks out ok. This 2 bed unit is in nicer condition, but lacks amenities that other properties offer like carports, decks, storage space, or a backyard. Market rents are closer to $600 or $650 but there is a lack of supply in my area so people are living with friends until they can find something. This property will provide me roughly $800 a month in income after all expenses including 100% financing on the purchase price. I renovated with my own cash.

Needless to say I am confident in this market and in my ability to manage and maintain larger properties.

The Deal

Looking for the next deal I found one through my carpet installer on a 16plex that just went up for sale(not on MLS, only through the owners). It was actually one of the buildings I said "wow, I would love to buy this!" when I was doing my research before investing in this area.

The building is 16 two bed units all with decks or porches that overlook a small lake/fishing pond and neighboring a park, car ports for all tenants plus 6 storage units on site for tenants. Full occupancy at $600 to $650 per unit with all utilities sub metered. The building is 20 years old and no major items need to be addressed from an initial walk around. Land is 3.7 acres and has room to build a 5 unit condominium that was planned by the builders who originally built and still own this property.

After inspecting the finances the property is currently bringing in $115,000 a year with $38k to $40k in annual expenses over the past 3 years although I would probably have 10% increase due to some special deals they have set up. Operating income therefore is estimated to be $70k this year which includes all expenses except for financing and property management outside of the resident manager.

Needless to say, running the numbers, this property makes sense at a price point of $700k, although I would prefer to be at $600k or $650k. Its not a steal, but its a quality property that will always rent before any other building in my area and has the best overall amenities over any property of its kind in my area.

I want to purchase this property but need to find $80k to $100k to close the deal with the bank which currently holds the loan on this property(bank loves this property and wants to hold it so the president has mentioned he is willing to require less down). I also have my loan through this bank, so they do know me as a good customer and worked with me to get my first deal.

I have a few ideas of ways that I could make this happen, but dont have all the details figured out yet. Please provide me with some suggestions as to how you might try and capture this deal with as much details as possible!

First, some background info! 

I bought a 4plex in my small town in the upper peninsula of Michigan earlier this year and things are going great with it. Just finished renovating my only vacant unit and had 3 calls on the first day posting it for $700 plus electric. I will have a tenent in at the end of the month given everything check out ok. This 2 bed unit is in nicer condition, but lacks amenities that other properties offer like carports, decks, storage space, or a backyard. Market rents are closer to $600 or $650 but there is a lack of supply in my area so people are living with friends until they can find something. This property will provide me roughly $800 a month in income after all expenses including 100% financing on the purchase price. I renovated with my own cash. 

Needless to say I am confident in this market and in my ability to manage and maintain larger properties. 

The Deal

Looking for the next deal I found one through my carpet installer on a 16plex that just went up for sale(not on MLS, only through the owners). It was actually one of the buildings I said "wow, I would love to buy this!" when I was doing my research before investing in this area.

The building is 16 two bed units all with decks or porches that overlook a small lake/fishing pond and neighboring a park, car ports for all tenants plus 6 storage units on site for tenants. Full occupancy at $600 to $650 per unit with all utilities sub metered. The building is 20 years old and no major items need to be addressed from an initial walk around. Land is 3.7 acres and has room to build a 5 unit condominium that was planned by the builders who originally built and still own this property. 

After inspecting the finances the property is currently bringing in $115,000 a year with $38k to $40k in annual expenses over the past 3 years although I would probably have 10% increase due to some special deals they have set up. Operating income therefore is estimated to be $70k this year which includes all expenses except for financing and property management outside of the resident manager. 

Needless to say, running the numbers this property makes sense at a price point of $700k, although I would prefer to be at $600k or $650k. Its not a steal, but its a quality property that will always rent before any other building in my area and has the best overall amenities over any property of its kind in my area. 

I want to purchase this property but need to find $80k to $100k to close the deal with the bank which currently holds the loan on this property(bank loves this property and wants to hold it so the president has mentioned he is willing to require less down). I also have my loan through this bank, so the do know me as a good customer and worked with me to get my first deal.

I have a few ideas of ways that I could make this happen, but dont have all the details figured out yet. Please provide me with some suggestions as to how you might try and capture this deal with as much details as possible! 

@John Arendsen I get introduced to some of the bigger players in a smaller growing market. Coming in with $1mil is a huge bargaining chip and allows you to be the money guy for deals up to about $4mil, more if there were some other investors or unique financing involved.  Do your research and get to know a few and try to be a parter in 2 or 3 different deals not necessarily with the same person or group. Be more involved in one and more passive in the others.  I would also suggest taking a look at some of the online real estate investing crowd funding sites. They seem like a great deal for the accredited investor.  

Now if it were my money I would go buy up some larger multi family buildings in a small growing market from older investors looking to get  out of the game. Listen to the most recent BP podcast. 

@Jim Wollmer I am personally not comfortable buying the "cheep" single family homes in a bad area. The only way I would go buy single family homes is in a college town or in a market where there is a unique opportunity to get appreciation off of holding or adding improvements to the property which usually you only get from the B class properties. 

I personally like multi families. I would suggest looking up in the fox valley area in Appleton or up to Green Bay. It is a growing area and much nicer communities then the D class it sounds like your considering in Milwaukee. Remember, if you ever decide you want to get out of the game would people be jumping at a D class neighborhood to buy your property?

Also, listen to the latest podcast. There was an interesting start to a discussion on the type of properties your thinking of buying. 

@Ndy Onyido Thank you very much! Just hoping to make life one big adventure. It certainly has been so far!

@Pete T. Thanks for the suggestion. I will look into those when I renovate my lower apartment. I may be able to get up above the drop ceiling to install. This building was a fire house at one point, then a health center, and now a 4 plex. This does mean there is the old tin ceilings in some places so I may have to tear that out to put in proper sound proofing. 

@Kevin C. @Ria Sophia Thanks for the encouragement! 

@Jeffrey Townsend Thanks! its about time for me to get off the computer and finish the drywall in the bathroom. The fun never ends!