All Forum Posts by: Account Closed

@Ryan Murdock I agree the price is too high and that the cash flow would be tight in a no money down scenario.  Based on a 1.25M purchase price, I'm coming up with about $50 per door (20 yr amort on both notes).  Which isn't good, but then again, if I wasn't putting anything down I wouldn't mind that.

The only thing I know about the seller's situation/history with the property is that they paid 775K in 11/2015.  I don't know what condition the property was in for that price.

I'd love to hear your thoughts on this property.  

http://www.loopnet.com/Listing/20317343/4100-Kings...

Provided summary is:

Sale price = $1,375,000

Units = 24 (22 flats, 2 townhouses)

Cap Rate 8.51%

Financial Overview provided:

• 194,940  - Gross Rents
•  (19,494) - Vacancy
•  (16,822) - Taxes
•    (9,467) - Insurance
•  (15,595) - Management Fee (8%)
•  (16,600) - Maintenance, Grounds, Reserve
• 116,964 - NOI Income

It doesn't appear that any work would need to be done, currently, so there's not much value to be added I don't think.  They're asking $57K per unit, which seems very high for the area, although, I'm comparing against apartment complexes at around $37K per unit.

My questions are:

1. What do you think the property is worth?
2. Do you think it is feasible/realistic to get seller financing for 20/25% down?
3. What type of terms would I expect on both the commercial loan from a local bank/credit union as well the seller financing? 

I appreciate your thoughts/opinions.  Thanks!

Micah

I'm from Evansville as well.  Glad to help if i can.  If you're looking at the property on Mill Rd, it's in a good part of town, but that house has some serious issues.  It's been up for auction for several months.

@Joe Xie Your bank should be able to put an ACH 'out' block on your account to avoid your tenant from pulling money out of the account.  If you have other regular transactions such as loan payments, etc. you can set up exemptions to allow those to go through.

@Bryan R. If you are doing substantial renovation to improve the value of properties that you are flipping, and you are paying W-2 wages to the people doing the renovations, then you should be able to take the Section 199 Domestic Production Activities Deduction (DPAD).

If you're hiring contractors to do the work, then you (your company) would not be eligible, but the contractors may be able to take the deduction.  If they are not already taking the deduction, you can provide that nugget to them to earn some goodwill with them.

@Eric Fegan You should be able to deduct your health insurance premiums if you were self-employed.  See:

https://www.irs.gov/uac/newsroom/dont-miss-the-hea...

There's a lot of variations, but all self-employed individuals should be able to deduct their premiums and reduce their Adjusted Gross Income (AGI) (assuming you self-employed income).  The deduction is taken on line 29 of 1040.  If you're a greater than 2% owner of an S corp, you can have the company pay your premiums, report the amounts paid on your W-2 in box 1, and then take the deduction on line 29.  If you're self-employed, or a >2% shareholder, and you're trying to itemize your health insurance premiums, then you're most likely missing out on a deduction to your taxable income.

The tax break that self employed individuals, or employees working at an employer that does not offer a group plan is being able to pay premiums before Social Security and Medicare (FICA).  When you're a W-2 employee participating in a group 125 plan, your portion of health insurance premiums reduce the amount that FICA taxes are calculated on.  That FICA tax savings goes to both your portion and the employer portion of FICA tax.