Posted by Juana on July 19, 2005 at 06:02:00:
Thanks : )
what to do with these deals - Posted by Juana
Posted by Juana on July 16, 2005 at 09:17:54:
Help,
I have found several properties in my area and am not sure how to approach them.
The first is a FSBO 3 famiy(2 bedrooms, kitchen-studio like apartments)with a laundromat on first floor and is sold for 570,000. Seller willing to owner finance but must pay asking of 570K and give 300K up front and owner must have first position. Rent roll is approx 2100 (month to month lease with 4 yr old tenants) and laundromat makes somewhere between 500-1000 weekly(approx). Willing to go lower than 570 maybe down to 470K but states no owner financing and property is commercial and bank will ask for 25-30% down. How can I make this work?!
The second is a 2 family FSBO. Needs work. Apartments are small and paneled throughout. Owner has built 2 illegal studio apartments in basement. New gas line 6 months old. New heaters/water boiler-6 months old. New roof 2 months ago. Asking 280K. I want to pay less but he will not accept. Bathroom on first floor-pipe was fixed in ceiling but he has not properly closed off ceiling. Claims appraisal came in at 325, 000. Selling because he purchased another property with business on first floor and needs to sell this one. Thinking of locking in with a contract and assigning or doing something myself. What should I do with this.
Also found 2 one family homes in nice area but they want 410K on one and 420K on the other. Different owners. One is a realtor and house belongs to elderly in laws. Acting like not in a hurry to sell yet they are packing and stuff. State if no proper offers they will place in the paper. Comps in the area are like 420,000. I see no room to make money on these two. Unless I help find buyer and pre-qualify/do loan paperwork( just started PT job as loan officer with local mortgage broker) What should I do? Do I try to lock in with contract and then assign? but there is no $ to be made?
Any help would be appreciated.
Re: what to do with these deals - Posted by John
Posted by John on July 16, 2005 at 22:55:40:
Personally I would keep looking. None seem profitable, but you do not give enough info.
Re: what to do with these deals - Posted by Juana E. Holder
Posted by Juana E. Holder on July 17, 2005 at 07:32:52:
Well I have not seen the 2 one family houses yet. I was scheduled to see them but after pre-screening over the phone I felt there really was no room in the deal to make money.
As for the 3 fam with laundromat. I do see some possibility if I could get it for less than 570,000. But according to the owner the bank will require 25-30% down. I don’t have that type of dough and I also have bad credit. I am trying to wholesale and birdog to get to the point where I can play with the big people :). Also…did I mention he gets $300 a month for a billboard on his building? I have not seen the property/have not appraised it so my info is limited to what I was told.
And last but not least the 2 fam that is 280,000 with illegal 2 basement studio apts. That may have some potential but requires some work. I am planning to lock in with contract and find a rehabber to assign.
The thing is I have an idea of what I should do, in theory. But I am a bit overwhelmed and just not sure.
Let’s see what happens.
Re: what to do with these deals - Posted by speednxs
Posted by speednxs on July 17, 2005 at 19:38:12:
The 3 family is a complete loser. I assume you need at least break even cash flow. A quick (and not particularly accurate) rule of thumb is that a property should rent for 1% of the purchase price per month. The mortgage should be no more than 60%-70% of the rent. The real analysis includes no more than a 90% occupancy factor (do not be talked into using 100%), property taxes, insurance, utilities, gardening, repairs and the infamous misc. For all you know this place may need $25,000 of work the day you buy it.
Forget the laundromat. If you are running a laundromat, that should support itself separately. Any laundromat doing $4,000 a month business can be a lot of work. Forget the billboard. It should support itself and may be lowering the rent you can charge. Even a 100% LTV interest only loan at 6% of $570,000 is $2,850/month. You would never get that good a deal anyway. I’ll bet the seller wants to unload this cash flow turkey. Not doing the math is the most expensive luxury you will ever “buy”.
Keep working at it. You’ll find a profit somewhere.
Re: what to do with these deals - Posted by Nathan
Posted by Nathan on July 27, 2005 at 15:34:12:
Woa there, slow down, you sound like a motivated buyer, DO NOT BE A MOTIVATED BUYER. Speednxs has some good advise. If you cant buy property for 60% of appraised value dont buy it, you need some wiggle room. I know the market is tight right now but it is a numbers game, you just have to keep looking. If you dont have a financial calculater, go to walmart and buy 1 for about 30 bucks. You need to know what the payments are gonna be on a certain amount of money and interest. Take 10 deep breaths and relax and then keep looking. Nathan
Re: what to do with these deals - Posted by Juana
Posted by Juana on July 18, 2005 at 15:32:52:
Thanks for the information. I will keep looking. But what about the 2 familyfor 280,000?
Re: what to do with these deals - Posted by speednxs
Posted by speednxs on July 18, 2005 at 16:37:06:
You still need to do the math on the deal. Your profit is your selling price minus your buying price and expenses.
Typical rehabbers want to buy at 70% of After Repair Value minus repair (and any other) cost. 70% of $325,000 is $227,500. Talk to your rehabber about his requirements.
Good Luck