All Forum Posts by: Michael King

I realize this post is from 2013, but I just wanted to mention fire sprinklers. Be careful, because new international building code requires that if you are increasing the occupancy of a property you are required to install a fire sprinkler system. And sprinkling a three-plex will likely require an NFPA 13R (Except in Massachusetts where you can get away with an NFPA 13D) sprinkler system which will likely cost you upwards of 20K.

I had this rather expensive surprise myself about 4 years ago. The project is still ongoing and a big headache. Just something to be aware of.

    Mike

Hi Everyone. I am planning on cold calling expired listing leads to try and find some motivated sellers. For once I think I have a fairly simple question. I have heard that when calling leads you should age them a bit. For example, FSBO leads should be aged 1-3 months, and For Rent leads should be aged 1-3 weeks. How long should I age expired listing leads? I believe that I read somewhere that you should age them for about 2 weeks to make sure they haven't been re-listed or anything like that, but now I can't find the article where I read that.

    Thanks,

                  Mike

Okay, so it sounds like I am trying to make it more complicated than it is (Obviously all the technicalities are complicated, but the general idea is basic). Any ideas on how to go about finding good real estate attorneys who specialize in specific niches?

    Thanks again,

                            Mike

Hi everyone.

    Hypothetical situation. Let's say I acquired a three family property using a 6 year lease option. Now let's say I use another lease option to sublet it to a person who is interested in buying it down the line. How would that work? I assume the person I sublet to won't be moving into the property considering it is a three family? Would they also sublet? Wouldn't that be like a sandwich-sandwich lease?

    Sorry, I am still confused as to how selling a multi-family on a rent-to-own basis would work or if it is really possible. I don't know what type of person the end user would be, or whether this is even a possibility?

    Mike

Does anyone have a list of exit strategies that would work for multi-family properties in either a "lease option" deal or a "subject to" deal (subject to their existing financing)?

    Thanks,

                  Mike

Thank you for the fast reply @Bill Gulley ! So take for example a three unit property with an option price set at 100k. I would first find someone interested in purchasing the property for themselves, charge them an option payment of say 10k. Then they would either move into one unit and rent out the other two, or live elsewhere and rent all three out. Then he collects rent monthly from his tenants, pays me rent monthly, and somewhere down the line he cashes me out in full? And this whole time he is paying me just the monthly rent amount, with nothing above and beyond being credited towards his possible purchase, right?

Now at what point does the commercial loan come into play? I assume he would acquire one when he decides to exercise his option? Now, you said that with commercial loans you can finance the option price. When you say the option price, that would be like the 10k in my example, correct? If he had already paid me the 10k up front, how would that be rolled into his commercial loan months later? Or is the option price not paid up front but rather when the option is exercised?

Thanks for your awesome response by the way, please don't mind my technical questions but I just read up a little on sandwich leases after reading your post. The info is much appreciated!

    Thanks again,

                            Mike

Is it possible to sell a multi-family property on a rent-to-own basis? If so, what is the general process?

Thanks,

              Mike

    Thanks for responding @Paul Timmins  but the exit strategy I am primarily curious about is renting to own. With a single family property for instance, you could put a tenant buyer in there and charge enough rent to cash flow. But when you have a three unit property, I would suspect that putting a tenant buyer in the property would be far more complicated because would probably need more than one unit filled in order to cash flow. Does that make sense? Unless you had one tenant-buyer and a couple of regular tenants perhaps? Any ideas? Has anyone done anything like this?

    Other than that, you could assign the contract, rent the property, retail it, flip it to an investor, etc., but I just can't figure out if it's possible to sell it on a rent to own basis.

    Thanks again,

                             Mike

Good evening everyone. Is there anything different about wholesaling multi-family properties? I live in Central Massachusetts, and around here we have a large quantity of two and three family houses. With single family properties you have a few different options including selling it on a rent to own basis. However, I imagine you can't really sell a multi-family property on a rent to own basis right? I'm not sure how that would work.

I know assignment of contract is always an option, but just looking for some stories and perhaps a list of other viable exit strategies.

    Thanks,

                   Mike

Right, that's the plan. But I am still wondering how you do it, simply to quench my curiosity.

    Mike