Does anyone have a good, reliable way to structure a deal to buy and wholesale multifamilies? My primary business is single fams, but I always get a couple of 4-8 unit buildings. I can get buyers for them, but I’m not sure what offer or how to structure the deal.
Any help would be appreciated,
Thanks
What do you mean by structure the deal? What to offer or the purchase process?
There’s a big difference in my state between 4 unit and 5+ units. With 5+, the buyer will need to get a commercial loan, so it changes dynamics and the numbers. I’d try to package the “residential” ones separate from the 5+ unit, but make sure people know they can buy all of them for one low price.
I’d do at least a 14-day option to try to find the buyer. You have to do your due diligence to know what the repair costs, current versus market rents, ARV, insurance, taxes, finance options, etc. are. I’d then present the data to the potential buyer. We try to partner with investor insurance agents and mortgage brokers so the buyers can have real numbers.
In Connecticut the 4+ Buildings qualify as Commercial.
I’m not sure what to offer as a purchase to the current owner to make it attractive to my end buyer.
I guess another way to put it “how do you price 4+ Unit Bldgs for sale?”
Plus I never have “owner occupied” buyers for even my two family deals. I can price the two and three fams to make them attractive to investors(landlords) because there are enough of them locally to gather accurate comparisons.
These bigger ones, 4+ units are not common enough to get good comps. And the require commercial loans to purchase.
Here is an example:
6 Units, fully rented Income is $6,000/month
Owners current expenses are $3,635/Month including his mortgage
His current net income is $2365/month
Mortgage is $250K / $2,168 PITI
His Mortgage is Assumable
He is asking $410k
How would you wholesale this?
Thank You.
You have to learn your market. I am in MA right on the CT line. I bought a 6 fam last year for 240. Most 6 fams are around 275 right now. I’m looking at two right now 175 and 250. Thats a big difference from 410.
There are quite a few markets in CT where those prices would be normal- for example West Hartford, Bridgeport, New Haven, etc. They definitely won’t cash flow with no money down, the only people seeing cashflow in those markets have big downpayments.
I did 100% financing on my 6 fam. I cash flow almost 2k a month. TO make it 100%, got a home equity on another property for down payment, and used a local bank for the main loan. I also used 10k to do improvements that would add value. I renovated two units and raided the rent it each $50, put a new roof on, replaced all the exterior doors, repaired a bunch of plumbing etc etc. I have about 175k in equity in that property now.
I did it all with no money out of my pocket.