Here is an example of what happens when an out of State owner has had enough. The property is a triplex with a 1 bedroom 1 bath unit, a 2 bedroom 1 bath unit and a 3 bedroom 1 bath unit. The owner had been worried about filling vacancies so told their property manager to rent it fast. To most property managers that means LOWER the RENT... And that is just what they did. This building was rented for $1,000 per month. The last straw was when the water main broke ($3500 estimated repair) and the building was tagged as uninhabitable (read NO RENTS). With NO tenants and NO desire to be long distance landlords their agent contacted us.Here is how we put it together:
Purchase price=$141,586
Down=$7500 (5%)
Existing loan=$90,930 fixed for 27 more years 6.75% $651.44 PI (took subject to this)
AITD to seller=$134,507 for 343 months 7.84% $1100 PITI monthly (wrapping around first)
We spent $2700 to repair the water main, did some clean up and now have the building rented at $2000 per month. If you are using your calculator you will see that is $900 per month GROSS rents. We will keep this building and get the benefits of amortization and cash flow over the next 10-20 years. We were able to partner on this property with an investor with IRA money and secure a good return for their future retirement.
