Hi!
I am trying to determine if this is a good deal to pursue or not, using a buy and hold strategy.
12 Units, 1 bedroom each (900-1,000 sq. feet per unit) with English basement.
1 bedroom rents in the area are currently going for $750- $1,000 per month.
Pool of (potential) renters have been identified. Filling the units, and consistently collecting rents will not be a barrier/problem.
The Barack Obama library is coming to the area in 2016, investors are saying its going to increase property values.
Owner, who inherited, and owns free and clear is going to aski $125,000 on the MLS.
There are potential options to use Private Money (not to be confused with Hard Money Lending money.) or Seller Financing.
Which option of financing is more beneficial/economical? Any reason why?
*There is already a great rapport with the Owner. The owner does not want to own/manage/or deal with this property. Just wants to get rid of it due to lack of time, and no interest in rehabbing the building in order to become a landlord. (Pain points?)
Q: What should the terms be using private money? 10% (or less) interest rate. Sharing ___% of profits.??
A buyer should pay: 65 to 70% of after repair value, minus rehab costs... or purchase for 60% if it's in the rougher areas. (Is this strategy only for flipping properties, or is it applicable to buy and hold as well?)
The property is on the South side of Chicago, Illinois in an area I would classify as "Rough" or C/D level, but there is a lot of rehab and new construction going on in the area currently.
The building needs to be fully gut rehabbed. I'm wondering about the approximate total costs for this?
Half of the building can be rehabbed at a time...6 and 6...to build up capital.
Lots of electrical and plumbing work needs to be done.
*The heating system is old, where there is no individualized furnace/ thermostat in each unit...That will need to be put in place.
The intercom system/bells/buzzer needs to be replaced.
The building does have a new roof, and new windows already.
There is also gated parking in back of the building...Not sure it can accommodate 12 cars.
1. What is the cap rate that investors look for regarding Chicago rentals? Is this monthly rent rates X 84= value?
2. For a "basic" rehab, using black appliances, standard carpet, cabinets, etc. do these numbers look right?
Paint - $1200
Carpet - $4.50 per square foot of room
Tile - $8 per square foot of room
Cabinets - $170 per lineal foot for lowers, $150 per lineal foot for uppers
Counter top - $35-65 per square foot of counter
*The units have hard wood floors that are in good shape, but need to be stained and rebuffed, or whatever you do to them to make them look new again...
Trying to determine estimate for rehabbing each 1000 sq foot unit?
3. What is the best way to structure the deal if you wanted to do seller financing? 10% interest? How do you determine how much for down payment if using seller financing?
Pay owner a set monthly payment for X years, and then pay off the balance by X years? What are reasonable/ good terms?
- Is using seller financing more beneficial than using private money?
4. Will points and origination fees be excluded from this transaction if using private money and or seller financing?
Would you go for this deal if you could finance it and rehab it?
Any advice/ insight/ input?
@SteveO
@biophase
@G_Alexander
@CashFlowDepot
@JScott
@ Others?
Thanks!
I am trying to determine if this is a good deal to pursue or not, using a buy and hold strategy.
12 Units, 1 bedroom each (900-1,000 sq. feet per unit) with English basement.
1 bedroom rents in the area are currently going for $750- $1,000 per month.
Pool of (potential) renters have been identified. Filling the units, and consistently collecting rents will not be a barrier/problem.
The Barack Obama library is coming to the area in 2016, investors are saying its going to increase property values.
Owner, who inherited, and owns free and clear is going to aski $125,000 on the MLS.
There are potential options to use Private Money (not to be confused with Hard Money Lending money.) or Seller Financing.
Which option of financing is more beneficial/economical? Any reason why?
*There is already a great rapport with the Owner. The owner does not want to own/manage/or deal with this property. Just wants to get rid of it due to lack of time, and no interest in rehabbing the building in order to become a landlord. (Pain points?)
Q: What should the terms be using private money? 10% (or less) interest rate. Sharing ___% of profits.??
A buyer should pay: 65 to 70% of after repair value, minus rehab costs... or purchase for 60% if it's in the rougher areas. (Is this strategy only for flipping properties, or is it applicable to buy and hold as well?)
The property is on the South side of Chicago, Illinois in an area I would classify as "Rough" or C/D level, but there is a lot of rehab and new construction going on in the area currently.
The building needs to be fully gut rehabbed. I'm wondering about the approximate total costs for this?
Half of the building can be rehabbed at a time...6 and 6...to build up capital.
Lots of electrical and plumbing work needs to be done.
*The heating system is old, where there is no individualized furnace/ thermostat in each unit...That will need to be put in place.
The intercom system/bells/buzzer needs to be replaced.
The building does have a new roof, and new windows already.
There is also gated parking in back of the building...Not sure it can accommodate 12 cars.
1. What is the cap rate that investors look for regarding Chicago rentals? Is this monthly rent rates X 84= value?
2. For a "basic" rehab, using black appliances, standard carpet, cabinets, etc. do these numbers look right?
Paint - $1200
Carpet - $4.50 per square foot of room
Tile - $8 per square foot of room
Cabinets - $170 per lineal foot for lowers, $150 per lineal foot for uppers
Counter top - $35-65 per square foot of counter
*The units have hard wood floors that are in good shape, but need to be stained and rebuffed, or whatever you do to them to make them look new again...
Trying to determine estimate for rehabbing each 1000 sq foot unit?
3. What is the best way to structure the deal if you wanted to do seller financing? 10% interest? How do you determine how much for down payment if using seller financing?
Pay owner a set monthly payment for X years, and then pay off the balance by X years? What are reasonable/ good terms?
- Is using seller financing more beneficial than using private money?
4. Will points and origination fees be excluded from this transaction if using private money and or seller financing?
Would you go for this deal if you could finance it and rehab it?
Any advice/ insight/ input?
@SteveO
@biophase
@G_Alexander
@CashFlowDepot
@JScott
@ Others?
Thanks!
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