Going to closing; any last minute suggestions, cautions??

Hey guys, I’m a few days away from closing on an 18-unit property, via subject-to the existing financing. I’ve done all the due diligance, property is in great shape just needs new management. The plan is to put down 12% at closing, fill up the vacancies and pay the seller via a refinance. 12% buys me 3 months time; should I need more time, I have to put down an additional 5% in month 3 to buy me another 3 months, for a total of 6 months. Since this is subject-to, I plan to get the deed. The property has 4 hard vacancies, 1 tenant being evicted, 1 tenant not paying full rent, and 1 tenant moving out. I figure within 6 months, I can at least get 4 units filled, leaving me with 3 units vacant worst case, so I shouldn’t have any problems getting a loan. I spoke to some lenders already, including the one that rejected the deal. That is actually why I’m buying it subject-to. I initially tried the traditional 80/20, but the lender rejected the deal after seeing the rent roll. So I offered to still close on the property to the Seller, but to change the terms. Fortunatly the seller is motivated and didn’t require that I up the price.

So if anyone can think of any last minute things to verify in a subject-to deal like this for an out of state investor, I’d greatly appreciate it! I plan to post my progress in repositioning this property in this forum, either positive or negative! I already have the property management company picked out that has already started advertising the vacant units and has 2 prospective renters eager to view the units. That’s already 50% of my objective.

Did the seller show you any financials that verified the previous years “Expenses” for the Property…I am just curious…

We are a Direct Lender with over 8000 loan programs & specialize in “Income Producing Property.”

I would be interested in finding out more about the Property which sounds like you have a good plan in progress to get “Permanant Financing” in place.

I would like to introduce you to our very streamlined process that could work well with your goal to fill the vacancies over the upcoming months of taking over the property.

Best Regards,
Mike Walsh

You will need to stabalize income before the majority of commercial lenders will consider the property viable (your last attempt failed because cash flow failed to cover debt service + operating expenses).

The sub2 arrangement should allow you ample time to improve vacancy—good luck…


Scott Miller