Can anyone give me some guidelines as to what should be included in an offer for a commercial property?
It’s a 46 unit apartment complex
4- 2 1/2 story buildings, all brick
100% occ.
Cash flow approx. $4k/month below avg rents
with avg rents cash flow approx. $6k/month
Any help or ideas appreciated
Before you make an offer, you should get a rent roll and expense report.
If the DSCR is over 1.00 then it is showing some profit.
If it is over 1.25% you have a better chance of getting financing.
You are going to have to get an appraisal on it which will cost you anywhere froj 1,500 and up. I would check with your local appraisers and determine what they want to appraise a 48 unit apt. bldg.
I would put down the very smallest earnest money deposit that they will accept.
Also, when you go into contract, many sellers use very slick contracts that allow them to keep your deposit even if you cannot get financing, even if it is due to the property not appraisiing for the amount they are asking.
So I suggest you read the sales contract before signing it and makes sure it has an escape clause in case you cannot get funding or it appraises low. THe second point is moot,m because if the property appraises for less than the asking price then the project is not bankable or lendable.
Jeff
I’ve got rent rolls, expenses, CAP, and DSCR.
Monthly rent - $28,000
Monthly expenses - $12,200
Don’t have appraisal, but do have recent comps for apt. complexes in the area. Range varies from $57k - $70k per unit. The $57k was in '03. The two that sold this year were $64k and $70k+.
$500,000 down - $2,000,000 mortgage
$10,000/month mortgage approximately (int. only)
DSCR - 1.58
Am I missing anything?
Hi my3sons,
Looks like an excellent deal.
Great dscr, You have necessary docs and it seems like you’ve done your homework.
Next step is to make an earnest money deposit or get a prequal on it first if it is not in danger of getting scooped up before you get to it.
What I do with my borrowers and brokers is have them put in a one page loan inquiry sheet online so we can look at the basics of the loan and if the deal looks good we make an offer or give some options and then order appraisals etc.
Good luck with it. It looks like a worthwhile project.
I there are any questions you have or anything I can do for you let me know. Help is free 
Happy Holiday,
Jeff
Hi,
I think I can find a better deal than this. If I can are you interested in doing a joint venture?
thanks
Andrew
Just wondering about a few things.
Does your expense figures include a management fee?
Consider 5% although many lenders will consider a higher factor.
Does your expense figures include a vacancy factor?
consider 5%.
Have you found a lender that offers interest only Commercial loans?
Very few do!
If you have found a lender, are you sure they will offer you a rate of 6% (that is what your figure of $10,000 per month IO, on a $2,000,000 would require). That is a bit hard to believe since Prime Rate is 7.25%. And unless you are planning to get a Conduit loan or a bank loan with shorter amortization, I cannot see you getting even a PITI loan at 6% (interest only is usually a higher rate than straight amortization or at least requires an add on expense to the amortized rate).
My3sons
Beware the naked man who offers you his shirt.
I would be very suspicious of osmeone who tells you they can get you a better deal when they don’t even know what deal you have.
beware of people offering to be partners with you unless they put up some money.
thrid, Wes has some very wise advice.
I would be very wary of someone who says they can get you an interest rate below prime.
Jeff
I’m not naked and I’m not offering you my shirt.
I’m saying do what you want and use your brains. If someone said to me I can do better I would listen and assess the info. Then I’d take it or leave it.
You can still take this wonderful deal you found…
Its up to you to decide your choices…it costs nothing to consider a point of view…you may learn something new. Surprise, you may even make more profit
Hi Wes,
To answer your question…
We do commercial interest only loans all the time.
Depending on the deal, we also do Neg Ams.
The key for investor loans is monthly payment not interest rate.
As for Andrew, are you offereing to put your money up for this joint venture you are offereing him, or are you trying to get him to do the joint venture with you with all risk on him and half profit on you?
Hey, my3sons.
If you want me to see what is available to you, feel free to put in a loan inquiry on my site and I’ll let you know what you can qualify for.
It’s free. You’ll know where you stand and you can do what you want with the result.
one last point with regard to Andrew… I am going to assume you have many years experience in this and would be willing to share some of that experience with us.
I’ve been doing this for over 15 years and again, I state, beware of the naked man that offers you his shirt.
Don’t take it personally, but I can’t see why he would need to joint venture with anyone unless that anyone is putting up half of the money and assuming half of the risk.
Jeff