Hello I have a lead on a 9 unit apartment building for 90k. Its in the need of total rehab the investor selling the building had begun work on it. He also mentioned the hard money lender he was dealing with said the building was worth 350k arv.
I know im going to try to talk down the seller to 70 k. I know i need a hard money lender but do i get the hard money lender first or get the house under contract should i use my real estate agent for this? Should i get a general contractor first to walk through it for estimates of repairs or do i need a general contractor?
I know all these simple questions im asking seem like i did no research but i have just for residential and this deal came my way now i just really need to know where do i start from here?
Why is the seller walking away after beginning the work? Problems bigger than he thought? Assuming (NEVER ASSUME -GET COMPS!) that the spread on this deal - 90K to 350K - is accurate, would make me guess that your repair costs might be in the area of 200K, otherwise why is this investor walking away from the potential profit? If my guess on the repair costs is anywhere near correct, it sounds like you might be buying the land with a total tear-down building. ??
Personally, I would try to make the deal first and simply write in contingencies that allow for inspections and qualification for the money necessary to complete the project. Your need for a real estate agent will be mostly based on your comfort level in completing the deal. I wouldn’t automatically assume that I need a “hard money lender”, I would shop the loan. If you feel that you do need a HML, how 'bout start with the seller’s lender?
Do you have the experience/time to oversee the project if you take it on? If so, you may not want to deal with a general contractor, instead going to the necessary trades (electrical, plumbing, etc.) directly. Some sort of building inspector might be the person to identify the problems that you are facing.