All Forum Posts by: Michael Core

I am finalizing a deal on a self serve car wash in a suburban downtown area outside of Atlanta. The area is improving as the local government is helping new businesses revitalize the area. The car wash sits on a main street, has great visibility, made of brick with a metal roof, and is 10 years old. All equipment is in working condition and needs only aesthetic repairs. 

I am seeking a loan with reasonable terms to acquire the property. 

Are there any lenders in the BP community or recommendations for lenders who may fund such a deal? Thanks in advance.

Based on your questions, it sounds like you need to do some quick analysis ASAP so that you can have an intelligent conversation with the bank. 

Most banks will be looking at the net income of the property and the debt service coverage ratio (DSCR). This is how many times the net income of the property will cover the loan payments. Many banks are going to want a minimum of 1.25, meaning the annual net income divided by the annual mortgage payment should be 1.25 or more. I would estimate the mortgage payment by running scenarios of how much the payments would be at 20 or 30% down (typical required deposits) and using whatever the interest rates are for those types of properties in your area (ask a mortgage broker).

Make sure when you calculate the net income, you account for some vacancy (the property manager should know what the rate is for your area) despite the fact that the property is currently at full occupancy. Also account for normal operating expenses, estimated property taxes (as these will probably be higher than what the previous owner was paying, due to the sale) and reserves for ongoing repairs as the bank will be considering these factors also.

Hope this helps and best of luck with your deal!

Thanks Rich!

I'm considering making an offer on a rental property being sold at about 80% of market value that is currently occupied at about $100 to $150 below market rent that that is under lease by a long term tenant until the first quarter of next year. The property has an unpermitted structure attached that is being used as a family room of sorts. The seller is a wholesaler looking to assign his contract and wants all cash. The property should cash flow at about 3% of the purchase price in the first year before income taxes but has major upside in selling after the current lease expires. My partner is concerned with the unpermitted structure and the 10 day close request. The area is a strong for rentals and retail sales. Other than an inspection and appraisal to validate the safety of the unpermitted structure and property value, are there any other suggestions with regard to ensuring the deal is worth pursuing? Thanks in advance for your insights.

 Thanks for the welcome @Miguel Dormany! 

 @Teri Waldrop, thanks for the welcome! So far Douglasville is treating me okay. I'm a city boy with country roots, so while adapting to the area has been somewhat challenging, it's nice to be out of the hustle and bustle of the city. I'm available pretty much every afternoon. You can find my email address in my profile and we can coordinate a time to chat.  Thanks!

 Thanks @Antonio Coleman. I'll definitely take you up on that. Thanks for the tip!

 Thanks for the welcome @Terry Burger! Yes, we've seen more bad years than good, that's for sure.  I'm grateful Lebron decided to come home to bring us a title. I think we can win it this year if the team can stay healthy.   

I'd love to connect with you. I am excited about what's going on in Cobb, but I'm working on becoming more familiar with more of the neighborhoods. I've only spent a significant amount of time one the west and south sides of the county.

 Thanks @Karen Petty! I would like to meet you as well. Let me know the details and I'll see if my schedule is open.

 Abhi, I'd love to connect. When is a good day/time to call?