Question from a first-timer

[Reeveso]

Hey everyone this is my first post so I'd just like to say hey!

Anyway, I'm 20 years old and want to get into real estate, and I found some pretty good deals in my area that I want to check on.

My question is...what questions should I ask when i'm first calling to get more information about the place?

All I can think of is square feet, how many tenants it has, what the rents are, what year the house is, and if there is any major damage

Is there anything else I should be asking about? This will be my first time doing it so I have no idea!

Thanks in advance

[Dennis Lines]

Are you looking for SFR's or multi-family? One unit to four units is still considered to be residential. Over 4 units is considered commercial. So different rules apply.

[Reeveso]

ahh I forgot about that....its an 8-unit that i'll be looking at

What things should I be considering since it would be commercial? This would be my first deal so is there anything "extra" or different that I would be encountering?

[Dennis Lines]

Most of the time you will need at least 25% down. After that you want to see an APOD(annual property operating data). This should be provided by the owner. It is a breakdown of expenses and profits. You need to determine the capatalization rate(return on investment) or does it pencil out? To find the capitalization you divide the net operating income by the sales price. If it is less than 5% you probably should not buy the property. Unless, you can justify increases in rents to increase the rate of return.

[Reeveso]

well looks like that deal might have to fall through for me then

I don't have much for a down payment at all and i'd need about 30k for the down payment.

There's no other way to work somethin out where I wouldn't need a big downpayment?

This would be a great opportunity for my first time...i'd hate to pass it up if I don't have to lol. Maybe I should start out small like most people do :(

[Dennis Lines]

You may want to start with a fourplex as they can be purchased with an FHA loan and will only require 5% down. And 75% of the rents are treated as part of your income to help you qualify. If you find one that needs some work you can apply for a 203K through FHA which is purchase price plus amouont required to re-hab. Good Luck

[Reeveso]

Awesome..there's actually a few 4plexes up for sale as well around here so thats great

I have barely any money for a down payment..but I know a few people who might be willing to lend me some for a 10% return or so if I can show them the books and that it would be a good deal

I appreciate all your responses, they've helped a ton :)

Also - "And 75% of the rents are treated as part of your income to help you qualify."

^^ That will help alot with my situation since I have an extra low debt/income ratio...but the only reason is b/c even tho I have almost nothing to pay for (pretty much only a $45 cell phone bill and 110$/month car insurance)...I only make about 800/month at the restaurant I work at