[plexiform]

Property description: newly built building with 3 residential units and 2 commercial use units.

Intended use: I’d like to move in to one of the residential units and rent the rest out. Currently all units are rented. The owner of the building lives in one unit. The owner would like to stay in the unit and pay rent for the next one year and possibly two years. All other tenants are contracted until June and have voiced no plan to stop renting.

Market: California coast. Very limited nice places to rent and rent is fairly high.

My current plan: I am going to look at refinancing my existing home and using that as a down payment for the new property. I will either rent out my existing home or just keep living in it until the owner of the new property decides to stop renting the unit he is currently living in.

New developments: since making this post I’ve learned that an investor has submitted an offer and the seller is going to be countering but I will not know how that plays out until this coming week. Apparently the seller is contemplating removing the appraisal contingency. This means if the home gets appraised for less than we had planned that the deal would still need to go through and if the bank decides to finance the property for a lower amount then The buyer is stuck coming up with the difference. For example, if I am basing all my numbers on an expected property value of $1.9M and the bank comes back and tells me it’s only worth $1.7M they will be financing for $200k less than initially planned, so either I come up with $200k or I accept larger payments per month which may mean I’m putting up cash every month that I wasn’t expecting to because the rental income will not cover that.

So we will see how this plays out in the coming days. At some point I may just get sick of this seller for Imposing unreasonable requests and walk away. I like this property because it makes sense for me and my family but I don’t think it’s a great immediate investment. For me the true value is going to be appreciated 15-20years from now when it’s paid off and I’m retired and collecting rent as a steady supplement to my retirement savings and are assets I can pass on to my kids.