Posted by Ed Garcia on January 09, 2001 at 19:59:34:
I take it you have good credit, because you’ve recently purchased you 4 plex.
My suggestion is for you to make your offer as you’ve told us you’re going to.
If the offer is accepted, I would then have a contractor bid what it would take to bring the property up to market.
I would then go to my local bank and show them all of my numbers. I would show them what market rents are in the area; I would show them comps on like properties. I would show them what I’m paying for the property and my contractor’s bid for repairs to bring the property up to market value. They then could see that I bought it for $30,000 spent $50,000 in repairs, ad another $10,000 for loan cost, holding cost, and debt service.
I’ll be in it $90,000 and the values $180,000, that will give the bank 50% LTV.
I would show them I have a performance clause with my contractor and allow them to plug in down time for repairs and to market the property to rent. I would tell them that I would like to pledge my other 4 plex as additional collateral for one year and then roll the loan into a take out loan ( permanent 30 year financing). In essence, I want them to treat the deal like a construction loan allowing them to put my contractor on a voucher system.
Tom I want you to digest what I’ve just told you in this post, and then if you feel you need clarification, call me at (909) 944-0199.
Looks like a good deal, Good Luck Tom,