All Forum Posts by: Jesse Andrews

Hey there-

OK, so I am trying to bridge the gap into CRE. I am a relatively new investor in Rhode Island, and have stumbled upon a possible owner financed deal (owner holding 20% second)

The property was listed on loopnet for months, and the seller removed it. I pulled his prop. records, found his name and got in touch. After a dinner mtg, we tentatively came up with a price. here goes:

16 units, all 1 bed. (this is potentially scary for me) although there has been solid rental history.
1 building
recent cap improvements: new roof, new paved drive, 15 of 16 units remodeled.
annual rents + laundry = 118,122
vac 5%
Adj. income = 112,216

expenses= $35,207

The owner is willing to hold 200k, and i'd finance the rest.
Selling price would be $700k

property based on a 10 cap is worth $725k

I can improve rents slightly, and lower expenses slightly.

Does this sound like a solid plan, or am I blinded by the owner financed deal?

I'd really appreciate any insight.

Thanks

Thanks Brian-

I was just wondering if these contracts were state specific. I've seen the contracts on bigger pockets.

Just want to make sure I'm not using a contract that will get myself I trouble or make the sale not valid.

Thanks

Hey Everybody-

Maybe this a dumb question, but I cannot find an answer, and hopefully you can help me out.

I live in Rhode Island, and am determined to get into the industry of REI. So far, I plan that I will Wholesale until I have built up enough capital to buy my 2nd milti, and then repeat and repeat, and repeat.

My question lies in the contracts required. After I determine this is a GREAT deal......

1. What is everybody using for the P&S agreements? My RE lawyer/Title co offers P&S creation, but I cannot seem to find a blank P&S. Is it standard practice to negotiate a price in person, then have a P&S drafted, or do I get the signature IN PERSON and get the place under contract? (I'm under the impression that I do not want to "snooze" and get the property under contract IF it is a good deal.)

2. Same question for the Assignment of contract form. I assume that this is easier and less complicated.

I have waged a full out war with marketing distressed properties, and leads are coming in. I cannot be unprepared when a great deal does materialize though......

PLEASE HELP!

thanks!!!

Thanks for the advice guys.

As far as a wealthy relative... that I don't have.

Overall, the peoperty should be a solid investment. As you can see, my only obsticle is $$ down.

Hard money wouldn't make this feasable... its not like my profit margin is huge.

Joel- 100% agree with you. I think the current owner has gotten a little soft, but not with collections.

the least tenured tenant is 3 years. Hie mentality has always been clean building, lesser rents. I saw the building this morning, and it's almost immaculate. It's an older crown there, with a husband/wife duo being the "youngsters" at 43 years old.

What if I try to make the 70k loan the first lein? Is that possible? Or would the lesser note always ne the second note?

Thanks for the reply Bill....

I was thinking the same thing. Not a horrible gamble on his end.... and not terrible on my end.

This just may be my best intro into the commercial side. Just need to pursue the 70k loan.... I have no idea how that would work

Hi Everybody-

I'm brand new to the real estate investment scene... but have certainly done my homework over the past year.

Recently I have spoken with an owner regarding an owner financed deal. These are the basics:

6 unit building, all are 1 bed 1 bath units.
4 units rent at $600
2 units rent at $625
4 leases signed until may 2013
2 units month to month.

all 6 furnaces natural gas, all 4 years old
all 6 water heaters 5 years old
all windows new
roof 9 years old
siding great
driveway pavement 8 years old
all units individually metered for gas and electricity.
all up to Rhode island fire code with pull handles and hard-wired to Fire Department
as a bonus, an outbuilding is on site used for tenants' storage.

The neighborhood is great. Good schools, mainly families, and LOW crime.

House was listed for 340k... i can probably get him to 300-310.
Appraisal done last year by valued at 390k (i know, i know i'm not going to trust that 100%, i'll have my own appraisal done)

He is looking for 20% down, and will finance the remainder at 4% interest over 20 years.

I'll probably try to get a loan for the 60-68k down payment. My credit is OK 680ish

He owns the property free and clear. He's 73 years old, and wants to cash out and travel with his wife before they're too old. basically, he likes me and wants to extend this credit.

From my calculations (including ACTUAL taxes, water bill, sewer bill, fire code testing, insurance) and figuring in vacancy fees.... im looking at 32k NOI

after debt service, im somewhere around 11k cash flow

keep in mind the market rents are closer to $675-700

What do you think?