Posted by Ed Garcia on February 08, 2001 at 10:43:07:
Tiff,
The answer is you could do it, if the seller were dumb enough to let you do it. You would have to have a lower LTV then 70% and would have to go “Hard Money Lender”, because the type of lender that would do multiple units would see right through this deal.
You as the borrow will stick out like a sore thumb. A lender will immediately recognize that you don’t have the sophistication, qualifications, or experience to pull this off.
I’ve got an idea Tiff; let your Mr. Know it all father do it for you. I’m sorry if I sound a little sour, but I’m not here to teach you how to kink a deal, and get into trouble. I’m here to teach you how to maximize and utilize financing, without going to jail.
Yes, I could do this deal in a heartbeat, but I won’t teach you how to do it, and your father shouldn’t either.
I’m looking at a six unit (3br each) deal for 400k. I plan to live in one and rent out the other five. Market rent is between 1200-1300 per unit per month. Thats 6000/mo or 72000/yr gross rental income. Knock off operating expenses and thats 54000/yr NOI.
My father says to have the seller carry 45% of the deal ($180000, 10 yrs, 10%), get a mortgage for 70% of the deal (280000, 30 yrs, subprime lender) and then at closing I would get 60000k (to use to pay off debts, make repairs, improvements, etc)
Is this kind of financing do-able. Could I really pull out cash like that? Seller would be willing to carry, but would it jive at the closing table since it seems to be overfinancing? I’m in MA.
I read Ed’s post and think I understand what he’s talkign about and know how I would go about getting the extra cash BUT there is a piece of info that I did not read in your post adn don’t want to assume anythign so… How were you or dad planning on walkign away from teh table with 60K and how did you come up with 60K?
Re: financing a 6 unit deal can I do it like this? - Posted by Jim Rayner
Posted by Jim Rayner on February 08, 2001 at 14:17:16:
Tiff,
66K is a very high price per unit unles your talking within the boston metropolitan area inside 128. Perhaps even a little high for the 128 to 495 region.
Are the rents you are quoting actual current rents or potential market rents?
I believe they are are consistant with the current rates but i wouldn’t pay 66K per unit anywhere in massachusetts. my typical is half that amount.
I invest in the 495 belt. this price is consistant with typical asking prices but i don’t consider it a viable investment at these price levels.