9-plex deal. Need help!

Rehabbing, Fix and Flip, Rental Properties
1

Here is the deal:

9-plex
$36,288 rent roll annually
$12,480 expenses
4% vacancy

Price $160,000
$128,000 1st bank finance 9%.
$32,000 owner carry-back 8% or lower.
$0 down deal.

1 unit is completly destroyed due to termites. ground needs to be redone. Owner is willing to assist in getting that fixed.

I ran the numbers: $4,849 annual cash-flow with this.
Is there any warning or anything im missing before I drive 7 hours to look at it?
Also are there city programs that might help with the termite damage?

2

Unless the termite problem is cured before purchase I don’t see a lender giving you a loan especially if you’ve got no cash in the deal.

3

Patrick is right, the building has to pass a home and obviously pest inspection before a bank will even consider lending…Especially since the termite problem is already an issue.

4

Alright, I will look into it further.

5

in addition to what the others said, if a multifamily property has termites, how can you be sure it is confined to just one of the units? unless i am totally wrong about termites, they probably are spread throughout the property, or will be if not eradicated quickly.

6

There is a program called Loansizer you can download a demo version at http://www.lendingapps.com/brokerpro.htm

Get your hands on a commercial rate sheet. And a property analysis spreadsheet.

Sit down and start plugging in numbers.

I would set the DSCR guideline to 1.4.

I would stay away from properties that would “be great if…”, unless you’ve got $$$. I think paying all cash for properties gives investors a little clarity. Using the loansizer program you will essentially be looking at the same data sets that lenders use. If a lender will not loan on a property then why would you as an investor want to buy it?

Just my $0.02

If you would like any analysis programs drop me line.