All Forum Posts by: John-David Herlihy

$1,700 for expenses on 4 units seems low to me. I would make sure you get quotes for insurance, double check taxes, make sure you properly account for vacancy and future capital expenditures.

I am relatively new to this and learning the ropes as well. @Mansi Kothari can you tell us how many units? I am taking a guess at 4, as you stated your occupation of 1 unit would be 1/4 of the total monthly income. If 4 units or less than you really need to use comparable sales to derive the value of the property, as this is what the banks will use. However, evaluating based on Cap Rate and NOI is fun and a good excercise.

I don’t completely follow the numbers. Are the top set of numbers all Pro Forma or Actual? Does the expenses ($7316.54) include P&I? If it doesn’t include P&I then expenses are >50% and would require more in-depth analysis. If P&I is included, how much? Do the expenses come out to closer to 50% when you remove P&I?

By my calculations, using the 50% rule and a 5% Cap Rate the max value would be $1,200,000. If you use the Pro Forma 6.27% Cap Rate the value would be set at ~$956,938.

Thank you @Dave Foster. #1 was what I was thinking, but I was not sure if you could “replace” the note with cash without affecting the 1031 process.

I am hoping to buy a package of houses via seller financing, but the seller wants to 1031, so I am hoping I can convince them that this is still viable. Of course, they will need to be able to carry the note and have cash reserves for the other investment, so it is a bit of a long shot...

Can a seller, that owns a property outright, seller finance a property, and still get the tax benefit of a 1031 exchange?

@Chris Connery I think it depends on how you have them metered. If the solar is set up for "net metering" tenants would get benefit of the panels. However, I think you also just have the panels feed the grid and get paid for the electricity.

I believe there is a lack of apartment buildings of any size in the greater Springfield area, therefore in my eyes, creating a potential opportunuty in this market. 

In light of this, I have a question for this select and targeted audience...

In an idealized world, if you were to buy a newly renovated small apartment building 8-16 Units in Holyoke, MA, would you want to buy without tenants so you can conduct your own due diligence, or with tenants and a proven rental history?

I am just getting started investing in Hampden County. So I can’t speak from experience, but I can to my expectations. Springfield is known as, “The City of Homes” and there is a significant distressed market of 1-4 family residences that is prime for forced appreciation. To this point, larger multi-family appear to be limited in number. However, I dream of converting an abandoned mill into a mid-size multi-unit.

Thank you for starting the discussion. Looking forward to following the comments.

I don’t have phone number handy, but search for The Moving Experience out of Portsmouth, NH. Jim leads the crew and they are beyond unbelievable! We have used them for 2 or 3 moves from our personal residence, including moving out of Portland. Total professionals, but they will move you into a Uhaul, etc. or can bring their own zebra truck.

I haven’t done this, so take this for what it is worth...

You could consider offering a seller-financed second mortgage for 15%-20%. This way the buyer gets conventional financing for the first 80%. You then hold the remainder as a second position note. The buyer may have to do some searching for mortgage company that will underwrite the first with a seller-financed second for essentially the down payment.

I think this may be a better solution and keeps your credit and money safer should something go sideways with the buyer. 

@Chris T.

If the goal is to have the rent money in the account and available for your mortgage payment, have you considered talking with your bank and seeing if you can have the mortgage payment due on the 15th of the month? This may be easier and keep you clear of Massachusetts tenant laws.