Posted by Kevin Lee on April 02, 1999 at 14:55:12:
But then I guess we are talking about 6 unit property. I thought it was a 4plex for some reason. Can you get a commercial loan? What about creating a note and sell it to pay off the balloon? Again, the property has a great cash flow, so you have a lot of room to create an attractive term for your investor and still have a lot left for your own…
Kevin
What would be a good offer on this 6-unit? - Posted by C.C.Reed
Posted by C.C.Reed on April 02, 1999 at 12:36:46:
Gross Rent (Schedule) $4400/month (52,500 p/a)
Taxes $260/m (3100 p/a)
Assumable 1st of 71,000 @ 8.25% - $930/month.
Balloon of $46,500 payable 12/31/2002.
Resonable condition, some deferred maint.
Listed @ $99,500.
Your input welcome.
–TKS–
–CR
Goofup on the calculator! GR is $2200–sorry. - Posted by CCReed
Posted by CCReed on April 03, 1999 at 09:56:32:
Ooops.
Thanks for the good feedback anyway.
–CR
Stop worrying about the balloon! - Posted by SCook85
Posted by SCook85 on April 03, 1999 at 09:32:36:
CR,
While you are worrying about the balloon someone else is going to be signing a contract. Get that thing tied up, once you have the property then the balloon becomes an issue. At this time the balloon should not be your concern.
I personally feel that with the cash flow the property is generating you can get the property refinanced with no problem. But don’t worry about that till the property is yours.
SCook85
A full price one . . . - Posted by JoeKaiser
Posted by JoeKaiser on April 02, 1999 at 17:58:59:
Write it up and get it signed off and then come back and ask if it’s a good deal.
Joe
Re: What would be a good offer on this 6-unit? - Posted by Charles - DFW
Posted by Charles - DFW on April 02, 1999 at 17:50:18:
Something I don’t understand is, you have an assumable of $71,000 and a balloon of $46,500 in about 3yrs. This totals $117,500.
Then it is listed for $99,000.
What am I missing?
Thanks,
Charles
Re: What would be a good offer on this 6-unit? - Posted by phil fernandez
Posted by phil fernandez on April 02, 1999 at 13:26:09:
The only expense I see here is the tax figure. How bout water and sewer charges, insurance, rubbish, lawn care, snowplowing, cleaning, painting, general maintenance, reserves for replacement, management fees, vacancy factor etc etc etc. Don’t forget to factor these all in.
The balloon coming up in three plus short years also could be a concern. You will have to have an exit plan to deal with the balloon.
We need more numbers here to determine if this is a good investment or not.
Re: What would be a good offer on this 6-unit? - Posted by JPiper
Posted by JPiper on April 02, 1999 at 13:05:18:
The numbers on this look terrific…even at the listing price. How’s the area? And what type of deferred maintenance are you talking about?
Assuming no major problems with either of the above…this looks like a deal.
JPiper
Re: What would be a good offer on this 6-unit? - Posted by klee,TX
Posted by klee,TX on April 02, 1999 at 18:32:18:
It’s the same note. The balance now is $71,000 the balloon in about 4 years is $46,500.
According to my calculation, by increasing your monthly payment to about $1769 will totally retire the note in about 47 payments which is about the time the balloon is due.
You definitely HAVE cash flow to afford this. Just check the vacancy rate and see if the scheduled rent is accurate enough.
Good Luck
Figure 40% on an older bldg. - Posted by CCReed
Posted by CCReed on April 02, 1999 at 14:06:58:
The concern is mainly the loan–it’s assumable, which is nice, but it’s a three-year bullet–which is not so nice. I was wondering if there were a real clever way to deal with it.
–tks–
–CR
Sometimes a no-brainer is just that… - Posted by CCReed
Posted by CCReed on April 02, 1999 at 14:20:58:
and sometimes not. The numbers look sweet enough to deal with most any forseeable contingency, even that neutron loan.
Location location location–Federal Hill, just outside Providence’s downtown core. Like Boston’s North End, NYC’s little Italy, SF’s North Beach, it’s hot hot hot.
The building’s a little funny. Rents are on the low side–but there’s no parking–you pay to park around the corner. Not unusual for that neighborhood, but there’s not a lot of upside in the rent picture. Tenants pay utilities.
Deferred Maint.
The main thing is that it looks like the owner got 2/3’s of the way through vinyl siding the bldg, but didn’t finish. Why? run out of money? Personal problems? It’s just a curiousity factor–there’s money there to finsh the siding. Of more concern is that 3-year bullet.
Any thougts?
–tks–
–CR
Re: Figure 40% on an older bldg. - Posted by Bud Branstetter
Posted by Bud Branstetter on April 03, 1999 at 24:04:23:
If I were buying I would be checking to see if the second is private and/or can be negotiated to pop the balloon. An individual may even discount for a payoff now.
Re: Sometimes a no-brainer is just that… - Posted by JPiper
Posted by JPiper on April 02, 1999 at 15:12:44:
When I take your numbers…and apply a 50% vacancy/expense rate to them (a number I’m more comfortable with on older buildings)…I get net operating income of $2200 assuming your rent numbers are correct.
Based on this, it looks to me like the balloon payment is a non-issue. You could retire the balloon just from cash flow after debt service. Now this might not be your preference…but work through the numbers, you’ll see what I mean.
Refinancing at that time shouldn’t be a problem either…but if I knew I could handle the balloon through cash flow…I wouldn’t be worrying about that. I’d be worrying about tieing the deal up subject to verifying the information and subject to assuming the loan.
JPiper
Why don’t you … - Posted by Kevin Lee
Posted by Kevin Lee on April 02, 1999 at 14:37:36:
What about just getting a no doc loan for 80%LTV?
The cash flow of the property is unbelievable!!!
If it was here in Austin, I would jump on it right away.
Best wishes.
Kevin
Re: Why don’t you … - Posted by BankRobber
Posted by BankRobber on April 03, 1999 at 16:48:05:
“unbelievable” seems to be a prophetic choice of words.