All Forum Posts by: John A

Things have moved pretty fast since my last post. So the selling agent finally got a hold of us and told us we can go see the property on Saturday Aug 10. In addition, I showed a video of a walk around the exterior to a buddy of mine that used to be a home construction worker. He spotted cracks and dry rot along the eaves and base of the property. In addition he spotted a change in color of the shingles on the roof. He wants to come with me to see the property in person. In addition, Homepath informed us today:

"Your offer has been accepted by the seller as being materially sufficient. However, the offer is subject to a final review of the contract package, including all terms and conditions in the Fannie Mae Real Estate Purchase Addendum.

One of the important conditions to final acceptance is your confirmation that the final negotiated terms are consistent with the terms that may currently appear in HomePath Online Offers. Please log into your HomePath account within the next 5 business days and revise your offer as necessary to reflect the final terms and conditions that have been negotiated. If the final documents are available, please upload them.

Once you have revised your offer with the finalized terms and submitted the final documents, the contract document package will be sent for execution and final acceptance.

You will receive an additional notification of acceptance from the seller when this occurs. "

So at this point, what would be the best use of my next 5 business days? I've yet to go see the property let alone have experts come in to do some inspection. In addition, I don't think they've fleas in one of the units so that I may enter for inspection. Thoughts?

John

This is a Homepath property. So it's HUD owned. No history on the previous private owner. Also, my realtor is having a problem for a week and a half getting a hold of the selling agent--let alone asking questions. I did a driveby this past weekend and it looks good so far--from the outside. The property is completely vacant so I was able to walk around the property but not go inside. There's a main unit that houses 3 units and a detached building housing the remaining unit. That remaining unit has a makeshift sign that says "Fleas. Do not enter". Among that, I wanted to ask:

What is the purpose of the propane tank at the back of the property?

What is the condition/status of the septic tank?

What utilities are metered seperately and which is not?

The back unit has a sign that says do not enter due to fleas. Could that be cleared out and by the time I visit the property so that i can see inside the unit?

Other hazards to property? Lead? Mold?

So far I have no response to a visit or to any of my questions. I've already put a bid into homepath but they haven't accepted. Is there too much risk on an unseen property that I should I withdraw my bid before it is accepted?

John

Hi Aaron, still looks good to me even with the numbers you've given.

BTW this is 30 year fixed. My bank already worked out a worksheet for me to include all the taxes, insurance and closing costs so the $581 number is pretty accurate.

Gentlemen, you are correct. The $581 number is including taxes and insurance. $400 is a very conservative number. I'm looking at various sources to try to get a feel for what the rent might be for a 1bd 1ba multiplex unit and what I found that they are to be in the high $500 and some into the low $600. However, these are apartments or half-plexes with a garage. Not sure if they are comparable with a unit in a 4-plex.

Here are the details:

4plex
Currently no tenants
Foreclosed
Asking $99,800
Offering $100,121.00
Potential Rent $400/unit
Closing Costs incl Downpayment $30,450.98
Loan Amount $75,090.75
APR 5.446%
Mortgage $581.40
Gross Monthly Rent $1600
50% Rule $800
Monthly Cash flow $218.60
Annual Cash Flow $2640.00

Good Deal? Bad Deal? Looks good to me. My first time so, I'm making sure its not too good to be true by checking with seasoned veterans.

I've yet to see the property but from the pictures it looks like its going to need some work. Not sure how much yet. Will see property next week.

Thanks!

John

Thank you all for your comments. Running through the numbers again, I came to the same conclusions as all of you. Not much by way of cash flow and if anything negative cash flow. However, I did learn a bit on how you folks processed the information given. Gives me another tool in the tool chest for the next deal to evaluate.

Again, I appreciate everyone chiming in.

John

Hello All!

I'm a bit of a newbie and I'm looking to purchase my first 4-plex. Please note that this is in California, so the rate of return may not be like that of other markets. Nevertheless, please let me know if I'm full of it. I don't mind you guys being harsh on me as long as its constructive. :)

Here are the initial details:

2 story 4-plex
Asking $379,000
Built 1959
3 units are currently rented and 1 is vacant
2 at $850 and 1 at $800
Seller pays sewer, water and garbage, which is $230 per month
Maintenance is $70 per month
Taxes are $3200 per year for $265 per month
Insurance is $1200 per year or $100 per month
Total expenses for him are $665 per month

I plan on using my VA loan benefit and live in the vacant unit.

Wanted to see what your thoughts, advice, or words of wisdom may be? I am going back to ask for a Schedule E and/or history of tenant and payment. Just wanted to know what other things I should be asking for at this point. Thanks!

John