Sat, Jul 04, 2009
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Short Sale On Distressed Dallas 32 Unit Property |
jterzi
3 Posts
Member Since: 10/04/2007
Castro Valley, CA
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Posted: 22:49 on 03-25-2008
I'm an investor helping an individual who is in default on 12 SFRs in the SF Bay area and 2 very distressed apartment complexes in Dallas, a 32 unit and a 20 unit.
Has anyone here ever done a short sale on an apartment building? Up to this point I have only focused on short sales for residential. Owner bought the 32 unit in 2004, the rent rolls & expenses were essentially falsified, he went through two property managers, kicked 20 of the 32 tenants out, spent 200K on rehab (system upgrades, all new kitchens, bathrooms and flooring) and ran out of money with 100K rehab still needed. He is 2 months late with the mortgage now.
It appears based on my calculations that he paid at least 3 times its value then in 2004. I don't understand how a lender's appraiser could come up with a value to support that purchase price.
Current income from the 12 remaining tenants is $6000. Before the 20 tenants were removed, income was $16,950. I will have rent rolls and expenses/taxes shortly. My question is how (and whether!) to structure a short sale offer on a commercial deal like this, and would this deal be attractive to an end-buyer at any price? Any and all advice appreciated!
June
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[ Edited by ypochris on Date 03/25/2008 ]
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bbeerer
1 Posts
Member Since: 02/08/2008
Littleton, CO
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Posted: 23:26 on 03-25-2008
I have an investor that would be interested. Short sales can be done on commercial properties much like residential. However it is not as common in commercial because there aren't 100% loans out there. You have to prove to the lender that the client cannot afford his obligation and that the old valuation of the property was/is not accurate, or that the market has declined and market comparable rents don't support the value, nor the debt. When you get the package together forward it to me, I have a couple parties interested in distressed property, maybe get lucky with a match.
Brett
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jterzi
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Member Since: 10/04/2007
Castro Valley, CA
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Posted: 23:35 on 03-25-2008
Fantastic I will private msg you next week when I have the package together.
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palmetto75
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Member Since: 12/03/2007
Charlotte, NC
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Posted: 15:54 on 03-28-2008
I think short sales are even easier on commercial properties actually. The lender calculates the loss potential by the LTV and rate they offer on each individual deal rather than sf housing where ther are usually blanket rates and terms. In other words they lend on the property and not the borrower.
The lender also recognizes that commercial properties flutuacte greatly. Given this and the fact that the property is nowhere near "stabilized" now I would say they should be more than willing to deal. Of course you will need to prvide as much backup for yr case as possible. A pro forma income statement showing a cap rate of 10%-12% wouldn't be unreasonable to derive the value.
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fastfixer1
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Posted: 00:48 on 04-25-2008
As far as Real Estate Investors are concerned a distressed property is any property owned by a Motivated Seller. A Motivated Seller is a person who is in a situation causing them to sell their property for less than the current fair market value. I think I can only assist you by providing a website link. This website contains tips given by real estate professionals while selling a distressed property. Here ***isn't*** the domain of the link...
***Advertising and self promotion is not permitted***
[ Edited by ypochris on Date 04/25/2008 ]
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