All Forum Posts by: Magesh R.

Thank you for all the folks who chimed in.

I will try to answer all the questions in this thread.

- Yes the deal makes sense at 80 so I want to go with it. 

- My total cost in will be 80+25(rehab)=105k and the ARV will be 135-145k. So it stands to 72-77% of ARV which is a decent deal.

- I am really not that concerned about how much money the wholesaler makes. I believe in paying well for good work and have no issues in them making this money. Such a high fee basically raised my suspicion. My concern was a) whether  this is normal b) is there something else that I am not presented with about the property. I don't want to find big surprises later. 

- My GC's inspection and assurance convinces me. I have done other transactions with him and so I trust his estimates. 

- The person who brought this deal to me has done business with this wholesaler before so that give me some peace as well

- I just got information that there are some back taxes and liens that will be addressed through this assignment fee ( so its starting to make more sense to me now)

- There is no doubt I will be doing more business with this wholesaler if this deal turns out to be what was projected(that will make him a competent one)

- BTW, my exit strategy is keeping it as a rental and doing a cash-out-refi some time soon.

My concern is whether there is some unknown issue with the house(since the contract price is that low) or they have done a really good job(and also got lucky) in getting the property tied up for that low of a price.

My GC looked at the house and did not find anything that we did not account for so it checks out so far.

@Jay Hinrichs

Thanks for the quick response. Because I see "assignment fee" in the HUD, I assume he is just flipping it and doesn't own it.

The wholesaler is charging ~40k as assignment fee for the property. This is almost 100% of the contracted sales price(40k). The property is worth more like 120k and with some rehab (25k) can go up to 145k so it still makes sense to buy from my perspective but I think this is very unusual. 

Can you guys please weigh-in on whether anything is wrong with this picture? I am not necessarily worried about the wholesaler making money(though it looks too high in this case) but whether there is anything more to it that I need to worry about with such a low contract price. 

 Thanks for the points Gerard

1) Yes I will be asking them for leases. How do I determine the strength of the tenants though? I dont expect to see any big public companies here

2) I want to keep this long-term. Buy and hold. I am going to look for any value-add opportunities and if it did will refinance and try to take some cash out in the next few years

3) Isnt the commercial property value driven by NOI. OR Are you referring to the trend of property values of the nearby SFRs as a proxy?

4) OK

It is in Maple Heights

I recently came across an off market office building in Cleveland. The person who brought it over to me says it is a good deal. The problem though is I haven't dealt with an office building before. I have experience investing in SFR rentals and flips but not on the commercial side.

I am going to ask my PM (who takes care of my SFR) to check this out. I would appreciate any inputs/insights/caution/pitfalls to avoid from the experienced folks over here so I can go through my due-diligence process with some knowledge.....

Obviously the numbers look great but I want to make sure I am seeing the whole picture.

Income - 77k/year

Utilities ~18k

Maint & repair - ~7k

insurance ~1.8k

cleaning ~1.5k

garbage ~1.4k

taxes 11.5k

permits - 1k

NOI = ~34k

I guess I can ask for 250-300k.

 Thank you for the info Ryan.

What is the rate and downpayment requirement for Park National Bank?

anyone?

What is the best way to go about finding banks which would do a blanket loan for an out of state investor? I am in touch with banks in Ohio that have good terms but unfortunately they don't deal with out of state investors. I live in NY and invest in Ohio.