All Forum Posts by: Lake I.

I woke up Thursday morning to a text from a tenant who told me the floor of their unit had shifted. (It’s an addition and is a second story.)

I rushed to the scene to find the fire department had beaten me there to shut of the water because there was a large pipe break under the floor of the unit in danger. Underneath the unit, a 20+ foot steel beam had fallen off its support posts. Causing the entire unit to sag. The building was in motion; tilting towards its outside corner.

Over the course of the day I had the fire chief, local inspector, emergency services, and structure repair guys from Serv pro tell me it was unsafe to enter and I can’t do anything until an engineer arrives. (It’s Saturday morning, still waiting for that.) Not to mention, ALL of my tenants of three units are now displaced. I was only able to get some things out.

Now, two days later, the building has made no further shifting. But, I am unable to get a crew in there to stop the mayhem from getting worse. Insurance isn’t promising full coverage. My hands are tied and my only choice is to wait.

I am posting this for help and advice. I’m a new landlord of only a year. This is my first property.

@Matt R. It’s about an hour and a half.

It was a little more creative than that! Essentially the seller and I worked out a deal on a separate note for the downpayment. At closing, there were "two mortgages"

Investment Info:

Small multi-family (2-4 units) buy & hold investment in Lilly.

Purchase price: $100,000
Cash invested: $4,100

Three unit building in an upper C and B class neighborhood. 13% Cap Rate.

What made you interested in investing in this type of deal?

The terms of the purchase were such that I didn't have to put a lot of cash down. The seller was motivated and I was motivated to buy. Both parties made it work out for the other and it came together perfectly.

How did you find this deal and how did you negotiate it?

When discussing real estate investing with a co-worker, he mentioned this investor to me and recommended I contact him. After a long discussion with the investor, he revealed he was selling this property and wanted to make it work.

How did you finance this deal?

Commercial Loan, 80% LTV.

How did you add value to the deal?

The seller wanted out of the property to free up credit for other deals more appealing to him. As someone who was starting out, I did not mind the headaches that the more seasoned investor was looking to avoid.

What was the outcome?

A great deal that gave me a great cash-flowing property.

Lessons learned? Challenges?

I should've requested the rents be raised before signing. Although, I have had no trouble raising them up to market standards.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

None. We both avoided using realtors as it would cost the seller money.

@Jaysen Medhurst the deal ended up going very smoothly! I am using the credit union again for another property I have under contract, now. 

@Kelsey Herbst I've looked at Lancaster county and the surrounding 'towns'. For example, Lebanon has comparable rents to places like Lititz but with fractions of home costs. It's a good way to make a start with less risk or at least it is for me. 

Anyone on this thread from Central PA? 814 area code. Looking for good markets to jump into for flips. 

The balloon doesn't scare me. With the money I get by not living in it I can pay the loan off in 5 years instead of 10 or 15. And the appraisal was from the previous sale. The appr is full of comps. And as far as owner occupy goes, why lose money when I can just own it as an investment. FHA is my last resort without getting a personal loan for 25% down or doing the CU way and seller financing, which the owner is all for. So what I am hearing is I need a solid answer from the CU after I order the appraisal on how much they will give. Rep seems more interested in the money making capability of the home and its current value than anything else.

@Jaysen Medhurst

Seller is asking for 20k under last years appraisal (we are friends). 3 units generating about $800-$1000 in cash flow.

Credit union will give me 85% loan to value. That’s 100% financing. Only catch is 15 year balloon.

I really prefer not to live in it. My goal when calling the CU was to get a personal loan for the 25% down, $25k for costs and down payment. When discussing that and the properties income production, he suggested doing a business loan and I pay my friend the rest through seller finance. If the appraisal comes back anywhere near 98k we don’t need anything except the loan from the CU.

I am going through one right now. I will report back.