Discrepency
I am negotiating on a 32 unit apt. complex, and have run into a snag.
The seller claims $95,000.00 in yearly gross rents collected, and yet shows only $55,000.00 gross rents, on each of last two years income tax.
The property is in good shape and 97% occupied with rents @ $265.00 mo. He has yearly leases on each unit. The units could rent for $325.00 each.
I believe the seller to be understating his income for this complex to the IRS.
The bank doing the financing may be willing to accept a P&L statement on the complex, but should I?
I would like verification of rental income in some form other than their own made up P&L statement.
Any suggestions on how I might obtain this information?
Thanks,
Scott
Thanks Tony. I appreciate your feedback.
Also talk with you title/escrow company (if you are using onw) or your attorney (if you are using one for your closing). Most title companies have disclosure packets already made up and can provide assistance drawing up a sales contract as well.
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Can anyone with experience help me on this??
10% in my opinion is too little for an unsecured position. For only 10% I would insist on being a lender in 1st mortgage position with max ltv 75%.
If I was an equity partner I would want at least 25%-30% return on my money depending on the risk.
How much is the total net profit on your deal? What about a 50/50 or 60/40 split on the profits?
The few times I was the money man on deals, the property was in my name and I got 50% of the net from the deal.
If you also have $ invested, you can apportion the % return, or guarantee maybe 15% annual return secured by the property.
Unsecured, expect to pay twice that. Just my $.02.
[addsig]
I would have to agree with the other posters that you have an unrealistic expectation to borrow private money at 10%.
I am aware of private money for 25% of the deal providing 100% LTV but only on choice deals. The nice thing is 5% - interest only.... for 10 yrs + quarterly dividends.
loan amounts 5 MM and up
Good Luck,
Robert
[addsig]
This investor would be secured by a real estate backed note.
This investor would be secured by a real estate backed note.
Can someome provide an example of the deal they did with the terms that were negotiated?
Thanks in advance.
Jon
What is a real estate backed note to you? A 1st mortgage? A 2nd mortgage? A 3rd? Or?
[addsig]
If you are offering a 1st position low LTV (60%-70%)note. 10% is feasable.
This would be a 2nd. What would be a suitable rate of return given my 750 FICO and 3 years of real estate management experience?