First of all, don?t even think about bringing the agent in on the properties you found that you like and are not listed. How to approach the owners? Call and ask if they are interested is selling. You should have an idea on what you are willing to pay before you call.
One tip on 4 unit buildings I overlooked 7 years ago is that the owner pays for ALL the water, trash, common area electric, gardener in addition to property tax and insurance. Your tenants pay for the elec, gas, phone, etc that can be separate metered. It sounds as if you intend to live in on of the 4 units? This could work out just fine if the numbers work and you don?t mind living there next to your tenants. It may be in the near future that you wish to live somewhere else away from your tenants, just a heads up on this.
You should look in the commercial REI group chat room for tips on how to determine the value of multiunit buildings. Comps are only a small portion of what you need to look at. If this is you first deal, please be sure you understand the numbers first. Good luck.
Posted by marcello on February 13, 2002 at 21:12:07:
I am currently looking to buy an owner/user 4 unit building. I have a broker looking for me but up until now, he has only given me properties that did not impress me (both quality and cashflow). So, I recently began looking around for some 4 unit buildings that I would like in order to show my broker what I am looking for.
Now that i have found some decent buildings, I would like to contact the owners myself to see if they would sell. I figure I might as well try seeing as though these are buidlings that are exactly what I am looking for. I am already pre-approved for a high amount so I will be able to move very quickly if I find an owner who will consider what i have to offer.
Can anyone offer me some tips on how to go about approaching them (I already have loacated the contact numbers and have some good comps to go on). Also, this will be my first deal and I am honestly very new, so I was wondering if it would be crazy or not to bring my broker in on this deal (to make sure everything is done rigtht) even though I did will have lined it up myself.
Posted by Brent_IL on February 13, 2002 at 22:16:03:
If you already have the building and don’t mind negotiating with the seller, six percent pays for a lot of legal fees.
I’ve gotten people talking by calling the owners and expressing my question in the past tense.
“Mr. Seller, My name is Marcello, and I was wondering if the four-unit building at 1234 W. Main is still for sale”?
This opens up the possibility for more types of responses that will lead to a dialog, instead of just, “It’s not for sale, who told you that it was”?
They might say, “We had it for sale when we lived there, but then we just rented our unit out” or “It was for sale a few years ago, but when we couldn’t get what we wanted for it, we decided to keep it.”
Once you’re having a conversation you can lead into, “Have you considered …”