4 plex

I am thinking you are going to hold the prop.
Get tax receipts for the taxes. Around 3k doesn't cut it.
House insurance seems a bit steep. Close to 200 a month. Pretty high.
Are the renters on leases? Yearly or month to month?
Who pays the utilities?
Is the seller holding the financing?
Are you going to manage it or a management company.
Have you done a walk thru or are you planning to do one.

Since Jeremy and I are buy and hold only, these are some of the questions I would ask a seller on my initial visit. Remember James, be very humble when you meet the owner or talk to him or her. No Donald Trump stuff.

Good Luck...Jan

I have someone that is interested in selling his investment property. He is looking to retire. One of his properties is a apartment/office center. He has six apartment above that range from 700 - 500. 2 Studios and 4 1 bedroom apartments. Below the apartments are two floors. One with two divided areas that are approximately 1200 sq ft a piece. Completely finished one use to be a lawyer office and the other a Real Estate Firm. Both have been nicely decorated. The other floor also has 3 separate office spaces approx. 800 sq ft. Shared and separate baths throughout the below level floor. The exterior is nicely redone in a sprayed with texture. The location is not prime, and the City has been suffering in this market. However investors are coming in and buying properties most are way below discounted 50 - 75% property value. However this owner says he wants 1 million. It would be worth that but not in today's market "I feel." I would say it could go for 375,000. There are no leases the bottom two office floors are vacant. If your interested contact me. the location is Aurora, IL.

Hi Jan like your answer the owner wants a offer( even though he is asking 90k)he wants POFs and EM and then he will talk, some thing doesnt sound good here, Jim

What doesnt seem right? Pof and Em despists are part of the real estate process for purchasing. So whats the problem? I dont understand.

Sounds like it has been on the market and he wants to dump it. Good. Depending on the area it could be a winner. I am all about location. If I wouldn't live there, well you know the rest. If you are serious you need to do a walk thru and ask for receipts, taxes, ins, util etc. Sounds like an investor using the POF and earnst lingo. Take a ride and check it out. what can it hurt?...Jan

I second that! Those are standard part of the purchasing process. What are your concerns?

Looking at the numbers, they seem good overall. Jan pointed out some areas for further review. But at $495 per unit *4 = $1980 gross rent per month. For a $90k offer price, that's a good ratio, especially if you have comps $15-20k above that (confirm they're good comps).

Certainly you have to do your due diligence to confirm all numbers, look for repairs and deferred maintenance etc.

Good luck and let us know how this deal proceeds!

- Tom

Well its this until he gets a POF, EM offer and he wants a price offer before he will give any more info and yet he saids he is firm at 90k for the property,Ieve never have given a price for a property with out looking at it and certainly not a muti family, how do you figure the true value, what comps I got were 110,519, 116,336 and 122,153 got them off wwwfindcompsnow.com if you can educate me on how to do this one please do, Iam all ears, Jim

I have other investors interested and Iam also looking to buy and hold, if wants 90k and I can get around 100-105k Id let it go as an assignment and I want to be fair with every one, maybe Iam working to many hours on all this( 6-12 hr days), its got newer windows, doors, paint and carpet he tells me, its doesnt look bad from the pictures but Ieve been fool before on pictures, if I can get him to let me do a walk through Id feel better and then do a follow up inspection, thanks for any help much appreciated, Jim

Hi Tom thanks for your in put to my confidence level is rising again, thanks every much appreciated, Jim ( he is 90 minutes away and wants out of this property)the point I dont get he wants me to make him a price offer even though he saids he wants 90k and then he will talk more about the property))

He is just feeling you out to see how serious you are about buying. I have a feeling he is a REI investor who has been around. Probably had his share of tire kickers and just wants to get down to the nitty gritty. Don't worry about full price offers either. If the comps are tru and the rent rolls are good it could put you into a owner finance position with him for 3-5 years. We've done a few full price deals on buy and holds and still make good cash flow. Take the trip to do a walk thru especially if you want to hold the prop...Jan

It sounds like what Jan wants you to get is the operating expenses report?

Hi Steve we have a wonderful family here and I love them all dearly, they tell like it is and I love that, Iam trying to get that first deal done even though Ieve had very good ones on the talble we never seemed to get all the way with the buyers, thats ok just testing my patience and I have alot of that, just want to get that first one through and hit the high road.We are so glad to have you join our wonderful family your in the right place at the right time,Than Jan as well this deal is really making think, Iam working with limited fundsjust one good deal would get me back in the game( student of life and getting better each day), thanks every one , Jim

Jim, Since I am home today with a touch of bronchitis, I ran some numbers for you. I ran this as a commercial deal, easier to finance but a little more interest for less time.
I ran the whole 90k at 6.5% for 15 years (this is without any skin in the game)

Gross Rents 1980
less debt serv -1200 PITI (I still think the insurance is high)

Lvs 780.00 net cash per month. I did not figure in vacancy or maint

While we always try to net 200-250 net per unit, this comes very close, and if you sit on your cash flow for a few months you could have maint expenses sitting there for you when need it. If you have some money to throw in and can negotiate the seller holding the note for 3-5 years it gets better.

Hope this helps a bit...Jan

Thanks Jan your awesome and thanks for your wok even though your not feeling well, that saids a lot about you and I cant thank you enough for that, thank you so very much.Now I need away to get it under contract, thats my next hurdle, that POFs is the next wall like to get one free that would help in a huge way, Best trans want 2k to bridge the deal and it still has to go through the Title Company and there fees, isnt life fun, many thanks Jan your a true blue.

Hi Jan I like that owner holding the note for 3-5 yrs, but not sure how to get that done, never did one before, thanks, Jim

Owner to hold note 3-5 then balloon payment. It works!

Wish you luck. I'm sure you'll be able to get a great deal!

Jim, If you do a walk thru and want to purchase it to hold here are some hints for you. There is no magic formula just good common sense. When you meet the owner DO NO TALK PRICE right away. Whoever talks price first lost the deal.
Be very humble, ask questions remark that the house looks in great shape even if it isn't
Look at all 4 units (attic and cellar also)
DO NOT come across like Donald Trump that you are a experience investor. Tell him you are still a novice.

Make sure you have run the numbers prior to the meeting. Know in your mind the most you will go

As you get your feeling on the seller you can come out and ask if would would be willing to hold the mortgage for 3-5 years. This is where you need to know you numbers. If he says no continue on and don't get pushy.(I asked a seller 5 times if she would hold the paper, she said no 4 times and on the 5th try she caved in and said yes)
If you have $$$ to put down or can access it, ask what he would need as a DP, but still do not mention price. He will and when he does you will know what type of deal you are looking at.

I have kind of run thru this quick, so if you have questions, let me know...God Luck...Jan

Yes jan can you please sen me a pm explain this process from top to bottom please and thank you.

Keep in mind, you don't give him the earnest $! It goes to the title co. The POF letter you can get from a Hard $ Lender, mortgage broker, or a reputable transactional funding company. All the research you can do in your due diligence period. If he insists you give the EM to him, let him know it's not the way you buy property. How much does he want for earnest $?

Hey Jim - did you end up making an offer on this property?

Thanks,

Tom

Good luck with everything!!! keep at it

That is some great information Jan! The art of negotiation is hard to teach, so it's great to get a glimpse from someone who is experienced, thanks!

Your Welcome!! Just helping out when I can...Jan