All Forum Posts by: Kurt Bouma

Kristina, tenants are not long term, 1 year for one and the other is month to month and has been there for 6 months. Rents (according to rentometer) are a bit low but, given that it hasn't been updated they are probably about where they should be.

Yes, there will be a few reapirs to be expected and hopefully I can knock a few bucks off before closing. 

Thanks for the reply.

Just looking for some feedback on a deal I offered on over the weekend. 

I've been in search of really any deal I could find that would cashflow a minimum of $350/mo out of that gate after ALL expenses (management fee, maintenance, insurance, lawn/snow, P&I). 

Without having time to find off market deals, I didn't really expect to find any such thing on the MLS. One popped up this weekend but didn't show any pictures (which is usually a sign). But, I figured maybe I'd be the rush if I took a look before they completed the listing. So I scheduled a showing the next morning.

The place looked fine for a rental duplex. It is a 1986 build and doesn't seem to be updated since then. Structurally, everything looks good. I estimate the roof to be halfway through useful life. A/C and furnaces are original, so they'll need to be replaced at some point. 

One side is 2/1 the other is 3/1. Side one is currently rented for $800, side two is currently at $1000.

While I was there, two other parties showed up to see the place so I figured (like many listings these days) they'd get a full price offer from someone. 

They were asking $161k and I offered $150k. They accepted, no counter.

I'll be putting 20% down and getting conventional financing for the rest provided the inspections don't turn anything up.

Side 2 has egress window in basement ready for 3rd bedroom to be framed and finished. Both basements are plumbed for bathrooms.

Just looking for a quick, "Hey nice deal!" Or (more importantly), "Are you kidding! Why would you do that with your money!" (with some justification that I haven't thought of.)

Thanks for taking the time.

Thanks guys.

I've always been under the impression that 1-4 was considered "residential" and 5+ was "commercial." However, I am looking at a 4 unit apartment building today that is listed with Colliers (the international commercial broker) and the agent tells me that this is a commercial property.

The property isn't in an industrial or commercial area by any means, as it sits in the center of a single family home neighborhood.

Can anyone speak to that?

That was my guess. Even if the purchase price is 25% or more below appraised value?

If a multi family property is apprised at $700K and you're able to come to terms with the seller at a purchase price of $525K (75% of appraised value) would a typical commercial lender finance the entire deal if their policy was 75% LTV or would they still require you to have some sort of skin in the game?

Thanks @Kevin Fox. I appreciate the quick reply. 

Property at present is a 6-unit here in Grand Rapids. I understand the pain of having to give tenant notices. Not something worth the hassle if you're dealing with someone with no intention of actual purchasing. 

I'll make work of contacting a few lenders and see where that road leads. 

Seller kept the appt for this one even without proof of funds, so we'll see.

(Apologies for the typo in the subject - can't figure out how it edit that)

For someone looking to get into multi unit/apartments I hear it's good to take a look at a few properties along with running the #'s. 

Problem is that sellers want proof of ability to pay in order to avoid tire kickers, which is quite understandable. 

So, for the experienced buyers out there, did you look at properties before proof of funds or did you at least talk with a commercial lender first and get some sort of commitment? 

Seems as though it's a bit of a chicken and egg problem. Lender isn't going to give conditional commitment with no specific property (nor would a private investor with no actual "deal").

Just wondering how this has been navigated by you experienced folk. 

Is it just flat annoying to look at a property without first knowing exactly how you'll execute the purchase?

@Account Closed in that it is just a risk you have to take and that it is highly unlikely for the clause to be triggered. 

Also, in case it's of any significance, the new mortgage is held by Wells Fargo.

I own two rental properties in Grand Rapids (one 3 unit, one single family). I recently pulled them out of an LLC and into my personal name in order to refi down to a lower rate. The new mortgage companies both tell me that I'll activate the due on sale clause if I attempt to move them back into the LLC. Any thoughts?