All Forum Posts by: Mike Zhou

They paid 8% preferred for the holding period (3yrs). Yes, it is an option to decline. I choose to decline since the underlying MF has appreciated quite a bit and it makes no sense to accept that buy out agreement. 

The MF Deal is refinancing after some value added. They provided a buy out option to return the full initial capital back, however there will be no more interest in the deal. Is this a common practice, I thought typically deals returns portion of capital to the LP after refi, but LP still retains the same percentage share. Am I missing something ?

To go with syndicate route, you would have to build a good nest first, say put in 100-500K into the deal every year, the compound IRR will really get you the desired financial freedom one wants. I started with SF and whence it getting to 30 doors, the amount of work involved will make you wondering how much it worth. I am in the process of moving towards the syndication route and looking forward to know some good syndicators pros recommend.

@Greg Dickerson Awesome feedback, I think it was just a fourplex with no HOA involvement, The CAP does sounds pretty attractive with no vacancy and owner is willing to seller finance some or all of the deal. Thanks a lot!

@Chase Louderback  will  try a local ads first

@Bjorn Ahlblad Those are really good point to consider. This owner doesn't not want to provide any financial statements, the rent roll is kind of sketchy too. Let's say that building is not managed poorly. As far as the tenant bases, I think I might stuck with those ones. The only reason I am taking on this deal is that my partner will be managing and rehabbing the unit to its full capacity. The counter proposal I have in min is to have a structure inspection and ask the seller to carry a note 15K so that he has some skin in the game and not totally screw us up. 

My other portfolio are most SFH or TH which have better tenants profile. This is a testing of water for multi-family investment. I figure if I can turn this one around, the learning experience is good plus for future endeavor.

Investment Info:

Mixed use 2 commercial building , one building (4 apt units, 2nd floor) 2 store front (first floor) and  one large (5000sqt) storage building  attached buy & hold investment.

Asking price: $650,000

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

Current CAP rate is 11+%, (5% vacancy estimates) value added to raise rent 10-15% to market rate. Good location, next to a CVS store.

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

I found this deal from a broker. Owner holds the property for 20+ yrs and retiring. 

How did you finance this deal?

Seller is willing to do whole or partial finance. Also local bank is willing to do the finance as well.

How did you add value to the deal?

I plan to  reduce expenses by charge back utility and raise rents to market rent.  Might need to invest 30-40K for capx with roof or other areas.

What was the outcome?

In the processing evaluating.

What suggestions requested ?

1. My first time investing the multi-tenants deal, any gotcha for these mix-used commercial building ? 

2. Would retail store/storage owner pays the utility typically in this type of deal ?

3. What target price I should going for ? near by comp sells 7.9% cap rate (better location)

4. How  to structure the seller finance ?

5. What due diligence should be done for such investment? visited the property once and seems in ok condition. 

We are thinking to ask some seller concession of the deal to compensate the "AS-IS" deal. Seller refuse to consider any seller finance and we needs to cover all closing cost. What kinds of concession you guys think we should ask for ?

Thanks  @Grant Rothenburger

@Chase Louderback  I will look into the local ads and check into police. I will probably have a structure inspector to check to make sure no major problem with the building.

Thanks Scott, I did run some craiglist test ads and got 4-5 response within a week or two. I think local ads is more effective in that town.  Most tenants are month to month and seems most are local and drug users.  Good suggestion to call the local police to check it out.