Apt Bldg Financing... - Posted by Iris

Posted by CLAIR_MO on May 28, 2002 at 14:55:21:

Iris, It sounds like to me the owner is not a motivated seller! Do you know know why the owner is selling and what are his needs not his wants? Is the owner willing to carry back a second mortgage if you could come up with the 25% down which would be about $187,500? Or would the owner be open to selling the apartment building to you through the use of a master lease an lease optioning technique which is being used to buy MHPs and other commercial buildings by other investors today? Find out if the owner is willing to do a lease optioning taking a reasonable amount $$$ dollarwise going to him on a monthly basis.

Apt Bldg Financing… - Posted by Iris

Posted by Iris on May 28, 2002 at 09:54:22:

I want to purchase an 18 unit apt bldg.
Purchase price: $750,000. Annual income: $115,740. Expenses: $49,060. Seller shows $19, 483 cash flow and return of 10.39%
Seller wants 25% down. Seller suggests me getting a mtg amount for $562,000.

Can you or anyone walk me thru this one. It could be my first large unit if I can make it work.


Re: Apt Bldg Financing… - Posted by Willis Smith

Posted by Willis Smith on June 03, 2002 at 18:02:31:

I would suggest never paying over 10 times the net (Income - expenses * 10). Don’t buy above $666,800. Also, make sure you get proof for the expenses. Like 12 water, gas, electric bills etc. Don’t take the sellers word on the expenses. You should create your own expense column along side the sellers and compare your figures with his. The seller may not include items in his column like, unforseen repairs, new carpeting, water heater, payroll, management fee etc. After you do that subtract the income from your expense side and multiply by 10 to get your rock bottom price.

They don’t call the income/expense report the liar’s sheet for nothing.

Hope this helps,