All Forum Posts by: Account Closed

Over the next year and a half I'll be back in a position to seriously look into another mutifamily project.  My two markets I'm in now are basically identical;  Norfolk, Virginia and Jacksonville, Fl.  One was home, the other is home so that's how I ended up with the two.  However, being identical, they are subject to the same market and economic forces, so I'm looking into other markets for multis.  I'm interested in commercial-level properties, not really interested in duplexes, triplexes, or fourplexes.  

Does anyone have any experience in the Tallahassee market with commercial level properties?  I did a few searches and didn't come up with many results.  I'd be especially curious to hear from anyone who has properties there and in other locales for comparison.  Thank you in advance.  

Message me and we can talk.  I work with one property manager now, and I  interviewed two others last year.  

I read your original comment and a few of the other responses from others.  I would say that the balloon shouldn't be an issue if you are taking care of the property and the tenants.  It's the nature of the beast when it comes to commercial financing, and even if the bank decides to NOT refinance you after the original term, you should be able to find a lender who would be willing to take on the loan.  If worse came to worse, you could self refinance the loan with friends/family/investors for a period of time until you found a bank to work with.  But ideally you should be way ahead of the balloon and know what next steps are before that time comes.  

If I were going to refinance my property right now I'd jump on the terms you quoted, they are pretty good!  

I've got a property manager in the area, and their service has been improving since a new POC took over last year.  I'd be curious to hear who you are working with.  I can share a bit of information I learned.  PM me.  

I've run numbers playing with how I would do owner financing if I were to do it. 

Here is an example based on your property:  starting price:  240k

you agree to 10% down based on that number  24k

then discount the price of the property 40k so your PURCHASE PRICE is 200

the remaining balance to be financed = 176k

Do an interest only loan, but offer him different rates, maybe 5%, 6%, 7%  whatever rate you and he can agree on.  

Agree to the same 5yr balloon.  

This will probably net the seller MORE than the current price (win for the seller).  But it will also potentially save him a bit in cap gains if he's made some money (though it will cost him some in taxes on the interest income).  The interest expense also helps you on your taxes.  

But it lowers  your actual purchase price to a point where you *may* be able to refinance some money back out of the property in 5yrs. 

Depending on the interest rate  you can agree on, it may be cheaper than a normal 25% down w/ 20yr or even 30yr amortization too.  You'll need to balance how much to put down vs the interest rate or longer balloon terms.  

Hopefully this helps. 

@John Pearson  It was a nice intimate little meeting.  We had four people show up, candidly speaking if we had many more than that it would have been difficult to talk and meet everyone.  

I will set another one up, I've been very pleased with the continued interest - I'll keep you posted.  Probably will look at a day after taxes are done.  

I totally agree with all the posts above - get the fans and wire them to the light switch.  

I'm happy to help.  My property will probably turn the corner for the better this year.  The management company has become much more attentive over the past few months.  We have two more units to renovate, but they should be done by the end of May.  I should be able to start taking some money out in the second half of the year.  

Many great responses so far - I live in FL and have a property in Norfolk.  I have found that I still need to be on top of the property manager.  Initially I was a bit too hands-off b/c of getting spoiled by my property manager in FL.  This lead the little happening on the property for several months after I took it over, but now we have bi-weekly meetings to discuss what's going on, and this has resulted in much more progress being made.  

the cash on cash return might be good, but the cashflow is negative.  But this thing is almost 100% financed, and you are living in it, so for a first step, maybe not too bad.  Here are some other things that you may want to consider:

-  the mortgage insurance - you will want to knock that out as quickly as possible, so ideally you can get to having 20% to put down asap.  But there will be refinance costs associated with doing this.  

-  Given that this is cashflow negative, you will be supporting this with work income for some time to come.  You've got alot of fixed costs, and alot of "what-if" costs that could come up with potential repairs, or longer vacancies.  If this is going to wipe out your savings, I would recommend rebuilding some cash on the sidelines quickly so that you don't get into trouble.