All Forum Posts by: Nazz Wang

Hi BP community, I am negotiating a purchase for a 8 unit building, 2 stores and 6 apartments, and the seller does not want to provide schedule E for 2 years for the building. They had agreed to provide all leases and vendor contracts, and estoppel letters. What are the possible reasons for this, and what are the possible negative outcomes of me just doing my underwriting very very conservatively?

Hi BP Family,

I am making an offer on my first multifamily building ever, so I want to know what doc's to request when making an offer.

It is a 8 unit building with around a 9% cap rate. There are two store fronts and 6 residential units total. The owner had it for 30 years and is retiring.

I want to ask for the below documents:

Current leases or one year of rent receipts to verify rent

2 year schedule E for the property

Then I ran out of ideas. Would the experienced buyers please help me out?

Nazz

Hi BP family,

Through what avenue do you actually draft a promissory note and mortgage deed for a private investor?
I have finally convinced a private investor to carry a 65% ARV note on a property of mine. This is not a new purchase, but a cash out refi. The mortgagee would have first lien. The LLC is in wisconsin, I the owner lives in CA and the investor lives in CA.
This is my first time with private investors. How are you drafting your notes and mortgage deeds?

I saw numerous online do-it-yourself lawyer websites and did try one out. It wasn't too complicated, and I understand I would need to notarized the docs and file them with the recorder's office. It almost seemed too easy and cheap for me. Is this what everyone is doing?
I also contacted a few title companies. they don't do it. So I did call some attorneys and am waiting to hear back.
Any insights?
Thanks.
Nazz

Thank you @Account Closed for the comments. I am going to write them a letter, mention the points, and see what they say. Thanks for the help!

The question is, how long do you plan to keep the property?

Would you consider setting up a laundry mat business at the commercial unit? They are pretty passive as far as I have heard and it will take care of your tenants too.

1. Do a 1031 on a San Diego property I hate to manage. 2. Use the 1031 to buy a 8-20 unit complex, or mixed use property. Or convince my landlord to sell me the building I am living in. 3. Add at lease 10 doors to rental profile, not counting the complex in 1031. 4. Convince my step dad to partner with me. 5. Convince my parents to move to the Bay Area. 6. Keep my kids home with me full time for the last year before they are in kindergarten.

Sorry to hear about all the stress. I would say to move on and find a new tenant. If you insisted they pay and move in per your lease, do you want to start a hopefully long working relationship like that? And how can you trust someone who doesn't honor their words to execute the lease and take care Of your property? If you want to get loss in rent damage, how much did you really lose? I am feeling like this is far from an ideal tenant applicant and yet you decided to rent to them, which tells me perhaps you didn't get other interested parties. So I would reevaluate the pricing. It is perhaps priced too high. In reality, would you have rented it at this price to any body else if this trouble tenant didn't commit to the lease? Third, I always take a non refundable holding deposit before I process any tenant applications. It is anywhere from $200-500, which means when I receive this in cash, money order or cashiers check, I will take the property off the market, and process the applicants application. If the application falls thru because of untimely or the lack of cooperation from the tenant, or any other wrong doing, I forfeit the holding deposit. If the application doesn't go through because of something out of their control, like job loss, or whatever, I return the deposit. If the application goes through, I apply that fee towards their deposit. That way, you can cover this exact situation. Honestly, congratulations! You just had your first lesson as a landlord, and it only costed you one month rent. Many lessons can only be learned through making mistakes, and most mistakes are very expensive.

@Account Closed 

Ladies, thanks for your input.

I agree with many of the same points you mentioned. Here is one thing I don't understand though. With multifamily complexes, the prices are more or less fixed by the financials. The banks are hawking the income and expenses of these complexes, and that singlehandedly determines how much the lender thinks is fair market value and how much they would lend to a buyer. For the most part, commercial complex prices are not determined by the market, but by the financials. The point being, when an owner sells, he / she knows exactly how much their price ceiling would be, as most people need financing for that kind of purchase. That pretty much makes the decision for the owner, whether he/she wants to be selling or not. So, if the owner doesn't discount for rent control, how are they finding non-cash buyers, except when the owner is willing to carry the first position note. How does this work?

@Account Closed 

Thanks for the input. Yes that is what I figured, that apartment building are in high demand here. And you are right, the building is in a LLC. I will make the letter look professional and see what they say. The building is 10 units and is under rent control. May I ask what type of serious issues when making an offer? I am assuming the new owner would be inheriting all the tenants and leases, as it is the case in California. And in SF the landlord can't kick the tenants out. Is there something I haven't considered? Would you please elaborate?