Posted by BillW on March 02, 2001 at 06:05:07:
Ro, Ok, here’s where to start. Check the surrounding area for rents, vacancy factors and value. Once you know that the rents will support the cost of the building with room to spare, then talk to the city (zoning, planning, code enforcement and building department) about this particular building and see what they are going to require. If it’s boarded up, it may well be condemned and it will need to be “uncondemned” by the city. Only they will know what they require. You should be able to do this in one day. Also see if the city ownes it. Once you have this information, decide if you want to make an offer. If you do, make one based on your approval of all repair costs. Start real LOW! Ask for owner financing. minimal down with payments starting after repairs are compleated and building is occupied. If it’s owned by the city, see if they will just give it to you. Then find a good contractor and get a complete turn key bid including separate utility services for each unit. Turn the 3 BR owners unit into smaller units. You’re not going to live there, so you don’t need a 3BR unit in this mix. Maybe make two 2BR units and 9 singles. Once you have the full pakage price, recheck your figures and if they still give you a nice positive cash flow, then approach a lender. The builder may well be able to help you there. Most lenders will require some serious money as a deposit on a deal like this, so if you don’t have what they’re going to require, get a partner (maybe the contractor). Also check out the available city programs. They may give you low interest loans or even grants to do this project.
Good luck and keep us informed.