I am a newbie interest in buying apartment building, I need to know if a building has an assumable 1st mortgage and also a standard 2nd mortgage how do I go about making an offer to the seller? I would just take over payments for the 1st mortgage and get financing for the 2nd mortgage. right?
And if the building has high vacancy loss and is not worth the full asking price( lets say about 1/3 less), how do I go about putting together an offer.
If it was just the 1st assumable then it would be simple, but there is still that 2nd mortgage steering me in the face. oh man my head hurts…
The property could have too much debt already depending on the area you are in. When the economy goes South sellers start dumping or giving back to mortgage companies. 2d lien holders get wiped out or sell their lien at a discount or short sale or short payoff especially if they are not getting payments. If there are a lot of vacant units you need to find the reason. If you can not fix the reason reasonably you may need to pass or get a lower price.
Once you make a low offer you will find out what is up and how low the seller can go. You can always ask the seller to help you get a discount on the second.
There are several books out that specialize in buying and selling apartments. I have been reading “The ABC’s of Real Estate Investing” by Ken McElroy and it will answer the questions that you have asked.
you are right, the property does have a lot of debt … besides the mortgage there is back taxes and water bill that has not been paid. I am told the high vacancy is due to mismanagement issues, the area is not to great, there was a big drug problem on the property, so he evicted most of the tenants. Also, The property was rehabbed 2 years ago but still needs standard repairs. Oh yeah before I said the vacancy loss was 80% it is actually 93%.
the abc of investing … is on the way courtesy of barnes and nobles. I see he is the guy who taught kiyosaki … hope it answers some questions for me…