Posted by Bill on September 20, 2001 at 22:09:10:
Forgot to mention that the 7.5K cash flow assumes you have 100K or so in it yourself. If you have to use seller financing for a 2nd, then the picture gets worse.
Ed can you do anything on this deal? - Posted by Nick
Posted by Nick on September 20, 2001 at 09:21:48:
Ed,
I have a deal to buy 9 duplexes from one owner. The purchase price is $345,000. The monthly income is $5500/mth. After all expenses and debt service the positive cashflow would be about $1500/mth. The debt service was based on 345K for 30yrs @ 9%.
As you can see from the debt service I need very close to 100% financing. I do have equity in other property that I could put up in liu of the downpayment. The equity I have is about 30K.
Do you have any programs that could handle deal. The properties are all on the section 8 program. These properties are all on the same plot and there is currently a FmHA loan on the property.
Thanks for any help. If you need more information just let me know.
Nick
Re: Ed can you do anything on this deal? - Posted by Bill
Posted by Bill on September 20, 2001 at 22:05:28:
Dont want to rain on your parade, but this deal looks pretty slim and your expenses appear to be way off.
Scheduled gross: $66000 Your figures
Vacancy factor 10% 6600 Always use minimum of 10%
Gross operating income 59400
Expenses 45% 26730 pretty accurate for 18 units all on one plot.
NOI 32670
Pmt on 345K @ 8.75% $32500
Yearly net: $ 170. or just over $14.00 per month cash flow. No where near $1500.
It will be very hard to find money much cheaper from a lender on this size project. You might find 8.5%, but would be tough. Also, you wont find any lender that will do more than 70 to 75% LTV on properties of this size. Also, most of them will only go 20 years, due in 5 or 10. A 75% loan will cost you $25150. per year leaving you with $7500 or so net.
I would heed Ed’s advise and answer all his questions before you make up your mind.
Re: Ed can you do anything on this deal? - Posted by Ed Garcia
Posted by Ed Garcia on September 20, 2001 at 09:56:28:
Nick,
You haven’t given us enough information on the deal.
(1) Describe The Units and the surrounding area?
(2) How old are the units?
(3) What’s the unit mix ( how many 1 br. 2 br etc)
(4) What’s the vacancy factor in the area?
(5) What is the gross income of the units?
(6) What is the vacancy of the units?
(7) How close are they to one another
(8) What is the NOI?
(9) What are market rents in the area?
(10) Are there any other Units in the area for sale?
(11) If so at what Price?
(12) What are the going Cap rates in the area on multiple units?
(13) Have any other Units in the area recently sold?
(14) If so at what price?
(15) How much does the seller owe on the units?
(16) If there is a loan, is it assumable?
(17) Will the seller carry a second?
(18) Is there any differed maintenance?
(19) If so, estimated cost of maintenance?
(20) How’s your credit?
In order for you to do 100% financing it would have to be a great buy, a property with terrific upside potential, a qualified buyer, maintain a 1.2 debt coverage ratio, either structured with a seller carry-back or cross collateralized, etc.
The type of lender you would use would be a local portfolio lender.
Ed Garcia