Monday, June 2, 2008

Multi-Unit Property in North Arlington

Hi Frank,
I've followed your blog on and off for several months and like your approach. I'm interested in buying a multi-unit property in N. Arlington where I can be an owner occupant. Do you or one of your associates have experience in this type of investment purchase? I have met with my lender and know my financial parameters and would like to find someone creative in helping me find a property where the numbers will work (rental income numbers are critical). I'm open to unofficial duplexes where extra units may not be listed under multi-family listings.
Thanks for your time and look forward to speaking with you.

My Answer:
Hey Paul,

Thanks for emailing me.

I have to tell you that my first instinct is that if I helped you, I'd likely end up talking you out of it.... And talking me out of a commission. But oh well, you have friends right?

As for multi family, I own a part of a 400 unit multifamily apartment complex in Richmond, so I know more than a thing or two. As for smaller duplexes, I haven't don't that, but the math should still apply.

The problem is that a ton of people, I mean even a guy at the pool today, wants to dabble in real estate investing. Dabbling doesn't work in my opinion.

Also the financials probably aren't there, and may never be. For the most part in Northern Arlington, any place you buy won't cover the mortgage. So with a monthly loss, you then are just speculating on the market rebounding .

Many, maybe not you, have a plan to live for free and let a tenant pay all, part or most of their mortgage. But it isn't that easy.

Sure you might do ok in 7 years, but it isn't a no brainer investment.

Do you have a particular place in mind? Did you try searching for Arlington duplex on ?

- Frank Borges LL0SA Broker Owner


Paul said...

Hi Frank,
Thanks for your response. I hear what you're saying and I realize it's no easy task. I currently own a condo in Courthouse and would like to rent it for a near break even while purchasing a second property that I would be able to live in while subsidizing part of the mortgage with a renter. I don't expect to become rich overnight but I'd like to upgrade in this area and I believe the only way is to have rental income. The property that jumped out at me was XXXX but I believe it's significantly overpriced. The numbers won't work at it's current price unless one of the units rents for over $2000.

FRANK LL0SA Va Broker- said...

Hey Paul,

I really don't do the sit down thing. I usually first talk on the phone and our first meeting is at a house. If you only knew how many people I sat down and talk with, only to talk them out of buying... so I became more efficient and use the phone and save meeting for those that are ready to buy, and then we meet at a house for sale.

I did some sleuthing...

1) I did a background check on the agent to see if she gets anything close to list.

Her last listing in Sept 07 was $655k , dropped to $630k and sold for $615k (53 days on market)

She hasn't done many other listings in 2008 or 2007, so I can't tell if she is an overpricer (different agents have different styles)

2) I emailed the agent to see what kind of rent they are getting now. I doubt it is $2,000.

3) I did a background check on the sellers on the MLS to see if they have sold anything else in 5 years. (damn it worked! It usually only works 1 out of 5 attempts)

- I found that they are near bankrupt! Since they were part of the 5% that closed a short sale. Started at $850k, sold for $700**. They bought it for $870k in Aug 2005

(I am going to a meeting tomorrow at 2pm and I know the agent that bought the above short sale unit, small world. I can ask her about the sellers)

- The property you like was bought for $265k in 2000, but I am fairly certain that they have refinanced all the money out of it.
- And it was previously listed at $680k for 80 days and never sold.

Also did you see this house already? Did you call the listing agent and have them show it to you? If so, that is also a major problem.

Did you see my video blog on on lowballing? I don't consider it a lowball if the property is way overpriced. And this market is void of investors, so I doubt they will get what they want.

So you still might be able to offer a decent clip below. I haven't looked more closely at the comps.

See wouldn't you rather me spend 45 minutes finding the above then chit chatting?