9 Unit Apt Deal...? - Posted by Tim

Posted by chris on June 01, 2000 at 02:44:37:

Post this at the Commercial Newsgroup and you will have a better chance of getting a response. You can find it in the yellow banner on the left of the page. Good Luck.

9 Unit Apt Deal…? - Posted by Tim

Posted by Tim on May 31, 2000 at 19:01:54:

I have an opportunity to buy a 9 Unit apartment complex. It is comprised of 4 duplexes and a small house. The asking price is 98,500 which is approximately $10K under the apprasied value and is 35 years old. However, the property was rennovated in 1998. Can anyone give me some advice on what problems to look for such as Leaded Paint or Asbestos?

The owner (6 yrs) is the son of the original owner (29 yrs) and has other commercial properties and wants out of housing rentals. As you can imagine, he doesn’t have much equity after six years. He wants to move the proceeds from the sales into other investments such as mutual funds, stocks, etc. Any ideas on types of offers to make?

I’ve just completed going the the CS NDP manual once but don’t want to pass up a bargain.

I appreciate any inputs!

Re: 9 Unit Apt Deal…? - Posted by AL

Posted by AL on June 01, 2000 at 22:03:10:


Concerning the Leaded Paint, ensure you get the document signed by the seller were they state that there is no Lead Paint in the house to the best of their knowledge. This is a standard form. If there is Lead Paint, find out how it is handled by your city. i.e. in my city, any building built before a certain date, 1978? will have lead based paint in it simply due the the formulations of paint almost all had this as an additive prior to this date. As long as the Lead Paint is most likely under many layers of paint, especially if the complexes were renovated in 1998.

Asbestos is another matter entirely. I would have the units inspected by a Building inspector, and a pest inspector. The building inspector will look the property over and advise you of the presence of asbestos, his inspection will have a warranty.

I don’t know how much money you have on hand for a down payment, but, you need to solve his problem. You can contact the county courthouse (tax department) and find out how much the property was worth when it transferred to him. This will give you an idea, after closing, what approximate amount he is wanting to place into stock market related investments.

A tactic I would possibly try is to explain to him the best aspects in his favor of using dollar cost averaging, (allowing you to pay him a second back), or his financing the entire amount. (Look for assumable loans and also for due on sale clauses).

If you do a land contract with him, this will allow him to spread his capital gain on the property across a larger span of time. You might even possibly get him to agree to finance the entire amount, 7 year term, balloon in 7 years, amortized for 30 years at X% rate. This way it would protect his stock market investments by dollar cost averaging his investments in the highly volatile market of today.

If you can’t get some type of seller financing, you might have some problems getting a loan. I know of some mortgage companies that all I have to do is show them a property with 4 units or less and a positive cash flow, and they will finance me. When you get over 4 units, it is more difficult, (in my experience), to get conventional financing; bank, broker, etc. You might be able to split the package up into pieces, 2 duplexes (one package), 2 more duplexes (second package), house (third package).

Hope some of this helps?