Advice On 6 Family
I have come across a 6 family for sale and need some advice/input. Here are the specifics of the deal
FMV - 350-375 (I am waiting on comps, but it seems about the norm for the area)
Price - 325k
Taxes - 0 - j-51 tax abatement for the next 13 years
Ins - 3k
heat - 2500
util - (common areas only) 1500
maint and payroll - 6k
water/sewer - 2700
RR is 44k so a NOI of about 27300
the apts are as follows
1 - 275.45 - rent control - Very old lady
2 - 496.67 - lease exp 6/05
3 - 492.36 - lease exp 6/05
4 - 892.23 - lease exp 1/05
5 - 750 - lease exp 10/05
6 - 759.27 - lease exp 1/05
3 of these are section 8 and at the end of 2 year lease terms. According to NYC 2004 prices for sec 8 a 2 bedroom gets about 1000 a month so next year the rents will be going up at the end of the lease terms.
Here is the catch - The owner of the building will only deal with someone who will put 30% down about 98k if I give him the 325k asking price. He is not holding a note on the property and I asked the broker why he want's 30% and he said that he has been burned with would be investors that can't come up with the cash or financing to close a deal so he insists on 30%. I also checked and made sure the 30% was not some sort of quick way to put the 98k in his pocket under the table and was reassured that that is not the case.
The building is in excellent condition and very well maintained. It has enormous future potential, it is not in a war zone but a lower middle class neighborhood. Anyway my question is how can I get around putting that much cash out of my pocket to make this happen?
Any and all comments welcome.
tks
John
Personally I would have him lower the price. I would start at 8-10 times the Net and work my way down. Also I would ask him what his current mortgage is see how much of a second he can take. Dont forget to ask what he bought it at and when and what the last known appraisal came in at.
This may be too nice of a property to buy with little or no cash out. Also with the asking price being what it is, you will definitely have to come up with some creativity or cash.
Good Luck,
Kyle
I don't think you should worry about this too much. Do you have the 30%? Even if you don't plan to pay that much. All you have to do is show him that you have enough money for this 30%. At the closing if you've managed to secure a mortgage for 80% or 90%, the seller isn't going to pull out of the deal.
If you don't have the money for the 30%, get it. Ask friends, relatives, credit card companies, whatever. As soon as you get it, put it in the bank and get a copy of your bank statement as proof of funds. The go and return the money. You're not breaking any laws doing this.
Good luck.
[addsig]
325k for a 6 family is a pretty good price i am cureently building 4 6 families in bushwick and they would sell in a heart beat for 800k email me