Posted by Ed Garcia on January 13, 2001 at 20:11:09:
You don’t need 30% down to do this deal. I’m a little burned out today from answering e-mail and other post, so I’m not gong to give you much detail. If you want to talk more about it you can call me at (909) 944-0199 next week and I’d be glad to give you more detail.
Bottom line, get a rental survey showing that the rents on the 8 units are below market rent. If the numbers you’ve given us are true and you can get $600 a month per unit. You can show Gross rents of $4,800 a month. Times 12, that’s $57,000 a year gross income. Cutting you numbers in half, gives you $28,250. Now Jeff, you normally wouldn’t do it that way, but I could see we have some fat in this deal if you’re right, so I just threw some numbers out there. $28,250 at a 12 Cap, the units would be valued at $235,416 if you used a GRM( gross rent multiplier) of just 5, the property could be worth $285,000. Jeff I don’t know the market in the area, and I’m just playing with numbers. But there is no question that this is a deal.
Jeff, you need to go to a small bank and put together an Academy Award winning presentation. I would put down $10,000 and use your other units for additional collateral, cross collateralizing the loan with both properties. I realize that you don’t really have enough equity in you other units, but were just putting up for good faith. The value of this deal will be in the complete rented units. I would have the bank lend you the money for fix up and put it on a voucher system like a construction loan. The bank will then be reassured that the work will be done, and feel comfortable that you know what you’re doing.
Jeff, first of all, you’ve got a good deal here. You need to know your deal so well that when you make your presentation to the bank, the bank will feel like a fool if they should pass up this loan.