All Forum Posts by: Moshe H.

I will look into all this, thank you. I'm not sure I can get the seller to hold a note as the property is bank-owned and I am giving a very low offer. In exchange they will want a quick closing, not too complicated, I suspect. I guess it depends on how desperate they are to rid themselves of the property.

Thanks again!

I'm trying to purchase a 6 unit that needs some work and the 25% down required by most lenders will  eat up too much of my cash.

Anyone know of a private lender who will go 80% on commercial who lends in NY?

Welcome from lower Hudson Valley! I'm pretty new here too, just getting started looking for rental investment. Much luck to you!

Ok, great, thanks for the help. I'm actually looking at a building where 5 of 6 units are rented and it has a long history. Does the bank look at the history before I bought it or only after?

Another great point you made was if it's up to code. I have to make sure of that. 

Thanks so much. Siding looks ok, vinyl, needs a power wash. But I might end up replacing it so it has more curb appeal. The realtor usually deals with big commercial and her background is construction so she was very concerned about the roof but it seems ok to her. I can't really know these things until I go into contract and do an official inspection. As it is I was locked out of 3 units plus basement, because prop manager is far away and would not come down just for me to look around. So I could find pleasant or a lot of unpleasant surprises later on in the process.

The rents seem reasonable but also look like they have room to go higher. I would definitely look at a laundry, one of the tenants told me if there was a laundry in the basement everyone would use it. I suspect tenants from surrounding buildings would also! So it could be a money maker. I couldn't easily shift the heat to tenants because it's two big furnaces for 6 units, but I could keep up on oil prices and maybe write something into the lease about percentage increases based on cost of oil. I just made that up, I don't know if any landlords would do something like that. But I am willing to get creative and raise rents, but also add value so I do not make the tenants feel like I'm squeezing them.

The reason I'm having trouble with the cash needed is because it's a commercial loan and I need 25% down. That's why I'm looking into private money; I'm supposed to get a quote today.

I will definitely verify, inspect, get rehab quotes and due diligence on the financials of the building, and most likely run the numbers another 100 times before closing! But all input is more than welcome, especially since I have zero real experience.

Looking into my first deal. Can you enlighten me on what seasoning is? Does that mean I have to wait a certain amount of time after purchasing with a hard money loan to refinance? Thanks.

Congrats, much success in the future. I live in NY but lower Hud valley. How do you folks deal w/all that snow? ;)

Hi this is my very first deal! I am looking at an REO 6-unit apartment building. It's in a small village but it's becoming kind of a trendy place, within a (long) commuting distance of the city so artistic types seem to be going there to get out of NYC. It's in a prime location in the village, near a few shops and restaurants.

The bank wants $345k but it's in pretty rough shape. Some of the fixtures, cabinets and even appliances are broken and management won't fix them in a timely manner. Even garbage pickup has been suspended for weeks because manager is not on top of anything. The tenants (I met 3 of 5 currently renting, 1 unit vacant) seem to want to stay but they're fed up. I don't think this building is attracting any other investors but me. I see some opportunity because the issues don't seem that hard to fix. I'm willing to get new fridges and cabinets and whatever else the tenants want to be happy. I'd like to freshen up the whole building and make it more attractive so I can raise the rents. It could cost anywhere from $30k-60k because I am just eyeballing it, haven't gotten a contractor bid yet.

Gross rent is claimed to be about $63k when fully rented, $52k right now, but I think I could raise rent if I just give people a decent place to live! Taxes $10k, insurance $2835, owner's portion of electric (common areas) and heating fuel (oil) $8000, sewer & garbage $2000, vacancy 5%. It looks like expenses total $27k plus maintenance costs and I would manage it myself.

I'd like to offer $275k. I have $100k in cash from a refinance and I also need cash to fix up the property. Another big factor in NY is closing costs - think $20k! So I am looking around for creative financing. I made a rough calculation that my zero-cashflow point would be a debt service of $2440/mo. Whatever I pay under that would mean positive cashflow, which is what I'm looking for.

But the building seems like it has so much potential, to raise rents and even eventually add units (it sits on a long narrow parcel about a third of an acre.) I'm really interested. Any thoughts are welcome!!!

Too much borrowing depends on what you can afford. I'm trying to borrow close to $400,000 on a deal because I believe the numbers will work and the risk is at a tolerable level. What's your net operating income and will it cover the payments on the debt plus? What happens if a unit is vacant for 6 months or a year. Will you be able to make the loan payments or might you risk default? Or even if you don't default, will you be able to afford to maintain your current lifestyle? All food for thought. I don't think it's about amounts at all. It's percentages and risk factors.

As far as rates, I'm not sure you can expect to pay 3.5% on an investment property. That's more like for a primary residence mortgage. Also, private money charges a premium because the lender may be taking on more risk than a bank would. I suspect even 5% would be a really good deal on private money!

Good luck!