Skip to main content
No. of Recommendations: 0
I am currently considering buying a 4-family building for about $350K. I dont have any money to put down, so my question is, where can I look for financing, and how will I know a good deal if I see it?



Mike
Print the post Back To Top
No. of Recommendations: 1
onlymike99:
I am currently considering buying a 4-family building for about $350K. I dont have any money to put down, so my question is, where can I look for financing, and how will I know a good deal if I see it?


Pardon me, but...

Is this a serious question?

a $350K 4-family had better be SOME building. The rents, to support that valuation, need to be in the neighborhood of $1000 per unit per month AT LEAST, and $1,300 would look a whole lot better.

If you have no experience, you are not going to get 100% financing. Period. Unless you can get the current owner to carry the entire thing (he would be seriously stupid to do this, but stranger things have happened). If you have the experience, then you wouldn't be asking the question here.
Print the post Back To Top
No. of Recommendations: 0
a $350K 4-family had better be SOME building. The rents, to support that valuation, need to be in the neighborhood of $1000 per unit per month AT LEAST, and $1,300 would look a whole lot better.

Jim,

Prices must be significantly lower in OH. In my neck of the woods (Southern CA), I'd be wondering what kind of a dump it was that was going for 350K for a 4 family building.

Still can't help on financing, though.
Print the post Back To Top
No. of Recommendations: 0
waxurf:
Prices must be significantly lower in OH. In my neck of the woods (Southern CA), I'd be wondering what kind of a dump it was that was going for 350K for a 4 family building.

Yes, that had of course occured to me. However, he didn't specify location and MOST places aren't as expensive as your area. There's Hawaii, and Denver, and Houston, and a few other places...

Our area is a low cost area, relative to most.

Print the post Back To Top
No. of Recommendations: 0
waxurf,jiml8,

It is in San Diego, and it is actually a rather nice place, to clear up any confusion.

Mike
Print the post Back To Top
No. of Recommendations: 0
Try a home equity loan, or having the current owner take a second mortgage.
We got the down payment of $34,000 from a home equity loan to buy a 4-plex in San Diego in April for $340,000. The mortgage is 8.25% (we stated we are living in one of the units, but actually live mostly on our sailboat). The units are all 3 bedroom, 2 bath in a nice area. The building is only 11 years old, but the tenants were terrible, so the units were trashed. We've gotten all the old tenants out by now, and have totally remodeled each unit (my husband does everything, besides running his handyman business) It's starting to cash-flow nicely now, about $1000 per month. But we had several months of one or more vacant apartments, and lots of remodeling expense. To get the good tenants, the whole place has to look nice.

We plan to buy more units with the equity in this place, perhaps next spring. But I'm concerned with being overleveraged, even though I have a good job as an accountant, and the rental market in San Diego is excellent. We try to use the "ten times gross annual rents = sales price" approach, but were able to get this property for about 7.7 times gross, due to the condition.
Print the post Back To Top
No. of Recommendations: 0
We try to use the "ten times gross annual rents = sales price" approach, but were able to get this property for about 7.7 times gross, due to the condition.

If you go with a GRM of 10, you are assured of having negative cash flow.

GRM of 7.7 in a good area is perfectly acceptable, and can lead to good gains.

GRM of 10 is sucker bait.
Print the post Back To Top