Purchasing 7 buildings some commercial need Help - Posted by Don

Posted by Ed Garcia on March 12, 2006 at 11:03:46:


Sorry, not enough info. Saying that the properties are at a 10 cap can be good if the area is a 7 cap area. For all we know you could be at 10 cap, the area is a 10 cap area and you are at full market.

When purchasing a portfolio from another investor it?s important you know how to structure the deal for a specific lender or various lenders depending on the property description or designation. It?s a matter of knowing how to property utilize or distribute the seller carry-back of the portfolio.

You tell us there are 7 building and they are over 5 units. This could be apartment buildings, office building, or in some areas retail units with apartments up stairs, so you?re not clear in your description. So I?m going to have to assume and you know what happens when we assume, that these buildings are apartments.

I hate to sound like a broken record, but here are 18 questions I usually ask when doing a deal that you described.

(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) What is the NOI?
(8) What are market rents in the area?
(9) Are there any other Units in the area for sale?
(10) If so at what Price?
(11) What are the going Cap rates in the area on multiple units?
(12) Have any other Units in the area recently sold?
(13) If so at what price?
(14) How much does the seller owe on the units?
(15) If there is a loan, is it assumable?
(16) Will the seller carry a second?
(17) Is there any differed maintenance?
(18) If so, estimated cost of maintenance?

If you answer these questions, then we can answer yours, with a meaningful answer.
Otherwise, it’s just, What ifs? or hypothetical.

Ed Garcia

Purchasing 7 buildings some commercial need Help - Posted by Don

Posted by Don on March 11, 2006 at 17:14:17:

I am trying to purchase 7 buildings a few of them will be commercial loans they are over 5 units. My credit score middle is about 695 the owner is willing to hold paper to make it a 100% deal. What will the bank want in regards to showing reserves and how much of the income from the properties counts towards the income to purchase. All of the properties have at least a 10% cap rate.

Re: Purchasing commercial - Posted by bellesguy

Posted by bellesguy on March 14, 2006 at 14:22:50:

Commercial loans should provide a rental schedule for the property and about 75% of the cash flow can be added to your monthly income. Reserves should be 6 months. LTV on purchase about 75% but can be more if strong income flow. Send me details I would like to help you get the necessary loans.