I need advice from NE PA, Ray NPA, Brad, Gevans and the like. Sid as well but this is about debt structuring. I am a small time LL, I am looking into buying a small complex. I will post the Numbers -

Units: 15 + 1 property manager on site; All 2/1. [this is key for me as well, a PM on site that has been there a while]

Ask: 830K Income: 123K at 0 vacancy NOI: 83K Utilities: Water by LL, all other by tenant

Condition: New floors, new water heater, painted in and out; 8 units - 2 have roofs replaced, other 6 are old Tenants: 1 section 8 rents:

50 below market; under $700 range

My offer: 750K (unfortunately its through a wholesaler and not direct to owner) condition is plumbing inspection, roof inspection with no immediate replacement (wont get more than 1 - 2 years from some roofs)

Funding: Why this is anon. I can liquidate a few things and get 350 together in less than 3 weeks; I can get another 100/150 from parents; need about 300 raised from friends until a commercial loan can be approved. I was thinking of getting a 100 day loan offering 10% guaranteed. I was thinking i can get the commercial loan process started before closing and it will take about 2 months. (putting in about 40 days of float). I am not doing hard money because don't want to pay for points.

Thoughts advice? I have never done this before!!! This would a cashflow deal and not equity deal. I don't see much equity in this. 7 yr exit would be to another investor .... I don't know if the offer will get accepted, but if it does the clock is on super speed!

Lots of ways to scrape cash together.

How much time do you have from offer to close? If a decent enough window, a local bank, that gets it, can do this deal. Especially if you'll put that much skin in the game and I'm guessing you've got solid credit.

Heloc. IRA loan may be an option, 401k loan may be an option, signature line of credit, do you have paid off homes you can pledge as collateral?

I realize losing the deal over financing is a concern, but 10% for 100 days is insane. I'd spend a lot of time lining up other options before paying such a high rate on a large dollar amount.

Did you know you can borrow from your retirement accounts? In some scenarios, you can borrow the money, one time a year, interest free, as long as you repay the loan in (my best memory) 60 days. After which, you'd pay some fees perhaps and interest (to your self).

I'd encourage you to be wary of putting most / nearly all of your liquidity and credit lines out to close the deal and leaving the funds in the deal. I did a deal with the majority my available funds and maxed out lines of credit. I had one banker bungle a deal and as a result, I white knuckled it for a month until I was able to do some cashout refis.

Also, as far as finding the right bank - just keep calling. I had a $225k deal approved without an appraisal and closed in 7 days - it can be done, but many will say it can't or won't. Avoid large national banks unless you want brain damage and the rage that accompanies it.. local and regional - they understand the local lending market and needs... good luck!

Lastly, on the timeframe - you can gain more time to close by leveraging the inspections. Find something you're concerned about and ask to bring in a specialist. Get something in the contract allowing you an extra week or 2 if needed during the inspection phase. If I'm you and going to do the deal - find a likely bank on Monday - lots of phone calls as soon as you have the deal. No one runs credit or gets financials until you have a meeting of the mind on terms of the loan and timeframe to close. Once you have that, immediately get the docs in and have the lender order a rush appraisal and title work. It can be done.

I had posted on your TEST list yesterday and spent considerable time with the numbers. Don't have that time again sorry.

One note other than your numbers don't appear right-- like the 25% vacancy factor and no real numbers for rents.

I am old fashion

I see my local banker all they time. I often just e-mail her the information you provided in a pro forma format and she can easily help

often just sit and chat when she doesn't have anyone in office

If she cant do it in-house she knows who to call

Seller knows what they're doing. They've put lipstick on the pig and are selling before they get the $50K hit for replacing the roofs.

Do you think you'll manage 100% occupancy? What will happen if the current manager decides to move on? (A good one is hard to find.) At 750K you're looking at a 10% return on your money max, PLUS the hassle factor. The stock market is a better bet for that kind of return. This deal will only work if you can use OPM.

General question: how many SFH's can you buy for the same 800K?

What is the NOI on that along with appreciation and better client's.

myob - wish you post on the other tread had not gottten blocked. there are emotions involved because i want to grow and this is a way. I dont know how to deal with this class of tenants. my rentals are SFH in the middle class tenant.

If the PM leaves, i wouldnt know where to go find another one.

I would use financing so it would be OPM (I am sure I can get a commercial loan) I just would have to confirm this thing can appriase for 775K. The district has it appriased at 600K but thats for tax purposes.

I have the last 15 month history and has been 90%+ occupied.

If i take 800K I would be able to get 6-7 SFH.

Anon TX your most recent post is disturbing and here's why.

First para second sentence. Never ever never buy property under any emotion-- except 1.

How much cheaper can I get this.

My post had to do with the cash flow not so much the financing.

15 units at 700= $10.5k x 12 months = $126K. Minus vacancy factor/repairs = 25% $31.5K is NOI of $94.5K. Option here is to get manager/repair man in that unit to do all of your empire. With your SFH's and now apts that will keep someone busy. I would not do rent discount. Let them rent unit - pay rent and then pay him or her salary. You may get lucky and get husband wife team.

If you dump the manager (which you could do if your close by) it's 16 units at 700= $11.2K X's 12 months= $134.4K X's vacancy/reserve of 33.6K from the 134.4K leaves 100.8K.

One last option since you have SFH's is boot the current manager and rent out the unit to your company for YOUR office space to run the houses and apts from.

So figure your base cost on debt here.

DO NOT FORGET ROOFS. I don't know of any insurance company not looking at roofs. One option is to borrow back down payment from seller to finance roofs. Even if he has to take the property's back in a few years -- there's no downside because his buildings will have new roofs.

Get highest roof estimate you can on paper for the seller. Then shop it.

You mention used to have 90 percent occupancy, used to have new hot water, used to have new drain lines, used to have new parking area - now how well equipped are you to replace things that are old so you can recover the higher occupancy or does this albatross have a bad reputation in town like a rusty old hot rod - at one time the hot rod was new too.

Similar to your deal, I made 6 figure mistakes in last peak, anxious to grow.. I don't know your market, if it is similar to most part of the country, it is approaching another peak..

You are lucky to have the board to help you brainstorming, smart to present it here. I was dumb 13 years ago and didn't know the board..

Yes I am lucky but have made many of my own mistakes.

I do have an itch to grow and turned here because I feel I needed to here it from people who understand.

I have requested but not gotten the 5 yr history. It was renovated post a major storm. Flooring, heater all is less than 18 months old.

not sure why non of my other posts showed up -

update: I needed an offer that Friday and never did get this thread to show up so had made an offer based on several conditions ie. Roof doesnt need immediate replacement, Plumbing inspection doesnt have sewer line on its last leg etc. and i could get 5 year rent history with occupancy rate average over 90% as I wanted the CAP on actuals to be at 10% or over.