All Forum Posts by: Matthew Nieroda

Thank you all for your advice and guidance. The property received a few offers while in the "first look" stage of homepath. I'm not comfortable putting an offer in at this time, so I am passing on the property till this initial stage is over. Unless the offer is accepted I still have a few more days to think over my decision.

Thank you @Gino Barbaro @Ryan Ball @Diane G. for your feedback and guidance.

You are all correct, it seems the biggest question is even though the numbers work great, there is risk in collecting rent, damage to the property, vacancy and if I'm prepared for that emotional stress.

There are a lot of naysayers out there that have been guiding me towards passing on the deal and looking for something I would be more comfortable with. I don't want the potential cash-flow to cloud my sense of judgment and realize this deal isn't for me.

@Luke H. Thank you for your response. The "class" basically to me stands for the type of risk, based on crime, school system, average income, etc.

Even though I don't plan on living there I would be completing majority of the rehab myself. So I would build relationships with neighbors and so on.  

I have never dealt with a lower income community like this and worry that the risk maybe greater then the reward. The last thing I want is a bad investment.

I'm looking at buying/holding my second investment property which is a Multi family, 4 unit building in a rough neighborhood(c class) for passive income. I planned to house hack unit by unit, until I arrived to the property where I was met by broken windows, squatter basement, and a shady neighborhood. Needless to say I won't be living there during rehab. I will give it a second chance and head back during the day this weekend to get a better feel for the community during the day, but originally I was there when it was pitch black around 7pm. 

The property requires much more work then originally planned, but the numbers work very well even with the new unplanned repairs. (purchase $300k / rehab $65k / tax $15k -- median rent $1300 x4 = $5200... monthly income  $2000) 

Would you pass on a deal due to the concern of future safety issues(vandalism/theft)?

C class neighborhoods come with c class tenants. What is the best way to get trustworthy and reliable tenants?

Any advice or guidance from your personal experience? 

My realtor came across a home where his client is looking to either rent a unit or sell the 2 family outright (property not yet listed). Sounds like the seller (50's aged women) may be in financial struggle but the home most likely has no mortgage since it has been passed down from her parents who have passed. 

The seller is potentially looking for $470k for a home that is worth $440k. My offer would be to owner finance with a $400K deal, $20k downpayment and finance $380k at 2% interest. Since it is a multifamily she would continue to live in one unit, where she would pay market value for the unit. 

I believe if pitched properly the owner financing would benefit both parties, especially her since she would not have to pay taxes on a lump sum and she would be able to continue living in her home she feels comfortable in. The deal works for me since I would be paying a lower interest rate then a bank, and work for her since she would collect more money over time then what she's asking.

Two questions. 

1. Who pitches the owner financing, I believe I can help the seller understand the situation and the details better then the agent, and is it stepping over boundaries by going around the agent to speak directly to the seller?

2. Is my 2% offer for owner financing fair? Is it to low? What kind of ballon payment deadline (6-10-15 years) is standard for such deals?

This would be my first owner financing deal, I currently have a condo that I would be moving out of and renting to move into one unit of this multi-family.

Any other information or help is greatly appreciated.

-Matt