First Deals

I have the following deals under contract and was wondering what everyone thought. They all seem to make the 2% rule so I’m pretty happy.

4 bedroom townhome
Purchase: 42k
Rents: 900/mo
32,500 10-yr fixed at 7%: $374

8-plex apartment
Purchase: 126k
Repairs: 24k
Rents: 3200/mo
112,500 10-yr fixed at 7%: $1306

2 6-plex apartments
Purchase: 145k
Repairs: 45k
Rents: 5000/mo
142,500 10-yr fixed at 7%: $1654

I was thinking of re-financing some of these in my name and putting them out over 15 years at a low residential rate. Thing is I don’t think it is possible since they are bigger than 4 units. Any thoughts here?

I don’t like deal number 1 because it’s a townhome, which makes me thing HOA fees and a HOA board. If it wasn’t for that, I like this deal.

Deal number 2 isn’t bad, but doesn’t quite meet the $100 per unit per month cash flow target with 30 year, 100% financing (which is how I compare deals). Not bad, just not quite there.

Deal number 3 looks like winner to me! I like it!


Believe it or not there is no HOA involved in #1.

That is the problem with condos. The HOAs charge too little to actually maintain the place and then impose assessments to make up the difference when things need to be fixed. This makes it difficult to determine what the true cost of ownership is. They also make it hard to control you investment. They pass rules against posting for rent signs etc. If there is no HOA there is a problem because there is nobody to establish standards. The place looks like crap because nobody makes them keep the places clean or nobody makes external repairs. Either way condos just don’t give me enough control of my property to buy one. I can find just as good of a deal as a single family as a condo with more control.

Why a 10yr fixed? Did a commercial lender actually quote you on that?

Plus, to refi them you need to own them first (or at least have equitable title under a land contract or something), since you just have them under contract (I’m assuming you mean an accepted Purchase Agreement), how do you plan to get into actually owning them?

Deal #3 seems to have the best cash flow. Make sure you do thorough due diligence as I assume the numbers are with no vacancy and there will always be expenses, surprises, maintenance, property management and vacancy.

Who is financing you at 7% for these properties?

pulled out of deal #1, #2 failed inspection, #3 still coming along fine…got a bunch more in the pipeline…but this is exhausting…

As to the financing questions…I’m acquiring/rehabbing cash then doing refi to get back operating capital. Wells Fargo is doing 10yr fixed/10yr am at 7% at 75% LTV…

Have you checked local banks? You may be able to do better than that.

All local banks are 3-yr or 5-yr balloons…i don’t want the interest rate risk…looks like they don’t either :banghead