- Updated On:
- November 17, 2021
About this opportunity
- 2021 Built – the building should be completed Feb. 2022
- Simply Do It CEO, Dani Beit-Or, visited the site and the building during Oct. 2021 – site visit videos below
- The building has 5 residential units on top and 3 commercial spaces on the lower level.
- Accessing the residential and the commercial are on opposite sides of the building so they don’t “interfere” with each other
- This is a commercial building and will require a commercial loan – we have terms from one lender listed below.
- The buyer is welcome to use his or her choice of lender.
- As it sits, the property is approximately 3 acres of mixed-use, with the potential to add 2 more buildings similar to the current one.
- The total Purchase Price with all the ground is $1,777,000
- It may be possible to purchase the building and its immediate area (lot) without the entire 3 acres and to get A price reduction See photos below (contingent on city approval of split). The estimated reduced price is $1,627,000
- Cashflow comparable: This property has the potential of generating ~2x the cash flow compared to our typical SFH investment.
Unique opportunity fee: in addition to your regular transaction fee (if you are not sure what they are let us know) – this opportunity carries an additional Purchase Fee to Simply Do It $9,500 at closing – paid directly to Simply Do It after you close.
Units and Rents
All units are vacant EXCEPT one commercial unit – A national financial advisors firm leased it for $1,900 per month (Lease is executed and awaiting occupancy), their space is built and (almost) ready for use.
|Upper – Residential||Suite A.||1/1||$1,150|
|Upper – Residential||Suite B.||2/2||$1,450|
|Upper – Residential||Suite C.||3/2||$1,750|
|Upper – Residential||Suite D.||1/1||$1,150|
|Upper – Residential||Suite E.||2/2||$1,450|
|Lower – Commercial||Suite A.||$1,900*|
|Lower – Commercial||Suite B.||$2,400|
|Lower – Commercial||Suite C.||$2,250|
*pre-leased at $1900/mo.
- Since occupying 5 residential units and 2 offices (1 is already leased) may take some time we have factored in 4 months of expenses ($10,000 x 4) into the costs of the building as a way to mitigate the vacancy.
- Simply Do It already spoke to its local property management co. about ways to start pre-leasing these units before closing (before the building is even completed). There are a few ways how to accomplish this and we are working with the local teams to put the best plan in place. The goal is either to have tenants move in before a buyer even closes OR have tenants ready to move in as soon as closing takes place.
- Note: the building must receive an occupancy permit before any tenant can move in.
|Suggested offer (low)||$1,627,000|
|Suggested offer (high)||$1,627,000|
|Suggested offer (options)||$1,777,000|
|Land Value (%)||25%|
|Building Value (%)||75%|
|Market Value (after improvements)||$1,777,000|
|Other Fees At Closing||$49,885|
|Down Payment (%)||30%|
|Down Payment Amount||$533,100|
|Mortgage Term (Years)||30|
|Monthly Mortgage Payment||$5,939|
|Cash Outlay (Total Out of Pocket)||$621,825|
|Property Tax Rate (Approx.)||1.42%|
|Property Management Fee||$948||$11,372|
|Total Fixed Expenses||$4,039||$48,473|
|Total Expenses (Fixed + Mortgage)||$9,978||$119,735|
|Financial Analysis / Deal Attractiveness|
|Net Cash Flow||$213,411||$486,120|
|Average Cash Flow/Year||$42,682||$48,612|
|Average Cash Flow/Month||$3,557||$4,051|
|Projected Property Value||$2,161,992||$2,630,394|
Who can buy or consider buying it?
- Property can (and probably should) be purchased in the name of an entity (LLC) – buyer’s choice.
- A buyer can be an individual or a group of individuals as one entity (LLC) – if you want to group a few of your friends into this transaction that can be done.
- A newly establish LLC is ok
Here is possible mortgage info based on a conversation with a local bank:
- This is considered a non-owner occupied
- Downpayment for a mixed-use: 20% (15 yrs amort.) to 25% (20 yrs amort.)
- ~4% interest rate
- The more is put into the escrow account the rate can improve
- Fixed for 7 years (with either a 15 or a 20 amortization schedule)
- 3 years pre-payment penalty (3%, 2%, 1%, 0%)
- At 7 years renewal is needed to new rate or refi – after 7 years it is pretty much a refi process
- Estimated costs/fees based on a $1.7MM price:
- 1% origination fee
- title fee 1.5%
- Apprisal – 3000-4000
- Environmental: $300
- Survey: not required (most likely builder has one already)
- Borrower qualifications:
- Guarantors that can float the property’s expenses
- Assuming PITI+costs is $14k/month
- Will ask for 6 months upfront to be escrowed (negotiable) – normally to be escrowed
- If multi-member LLC: full guarantees from all members – will require to be an underwriter
- LLC can/is the borrower
- Loan timelines:
- Underwriting takes 3 weeks
- Apprisal and titles can take 45-60 days
- Can be done an As-complete apprisal
Open Item/s & Questions
- What does the warranty cover and for how long?
- Builder: “Warranty is essentially bumper to bumper for 1 year.”
- Are you still on track to finish by the end of the year?
- Builder: “To be safe I’d like to say February 2022. With Thanksgiving and Christmas in the near future, along with the new year, our trades and suppliers seem to always slow down so I’d feel more comfortable allowing some extra time.”
- Do you have a market rental research you can share w/ us?
- Builder: “I can share the lease in place for one of the units as well as pull some other information. May take a little time to compile, but the data is out there that we can help get.”
- Do you have a recommended lender for such a building we can explore terms? –
- Builder: “Yes we can make the intro”
- Since this is property is not ready yet, when do I start making payment?
- At offer acceptance, you will need to send a deposit or earnest money. The next time funds are needed is when closing takes place.
Site Videos – taken Oct. 4th 2021