BiggerPockets

Ok so I have a gentleman that wants to sell his 45 unit apt complex. I need to know what kind of questions that I need to ask him so that I can answer buyer's questions. I've never done large multi units before what kind of numbers should I be looking at? All help would be appreciated.

This is what I know so far...

"I have an apt building on 30th and Harrison that I would be willing to trade towards some rental homes. The building is 45 units, with a mix of studios, one bedrooms and a two bedroom, two bath. The building also has a very large paved lot next to it that could be possibly built on to accommodate a large number of units. The building may be historic as I understand there are tax credits available for it. The property taxes are currently around $1400/yr. The income is around $256,000 or so per year gross. The building is separately metered, so that could be passed on to the tenants if desired. The loan can be assumed, and, we would be willing to carry the second as well with cash or a trade of rental houses as the down payment."

He is interested in SFR's instead of multi's let me know everything that you would want to know about this property if I were wholesaling it to you.

Any input would be greatly appreciated!

Oh and if this is something you are interested in please PM me.

Thanks

The property taxes can't be correct at $1400 per year?

Chris

1400 per month?

$1400/month or even $14000/year is more believable than $1400/year.

Hello Justin,

On 30th / Harrison I found a big apt complex. It´s definite MO side. A bus depot is nearby.

Okay, what you need is following:
- rent roll last 3 years (thanks Mr_Investor)
- approved profit & less of the last 3 years, the last 12 month in detail
- property statement (needed maintenance, shape of the units and the building) any violation from the city
- the complete unit mix (how many 1 bed, 2 bed and so on)
- todays occupancy
- market rents for the units (yes or no)
- is the property self managed, if not name and address of the management
- utilities, gas and electric pays the tenants (it´s important)
- property and unit photos

Thats the prime.

$1,400/yr is possible the seller wrote "building may be historic as I understand there are tax credits available for it" and it is a historic building

-Uwe

Justin,

Can you find out why the taxes are only $1400 per year? They are too low.

You may also have a lot of turnover with them all being 1 beds and studios.

Also, how can they guarantee 95% occupancy for 3 months? If they can get it to 95%, then it shouldn't be at 80% now.

Chris

OH, another thing that is a typo is I said that I was wholesaling this property when really I do not have it under contract yet. So technically at this point I am a birddog.

Any suggestions on how I can make sure that I get paid a birddog fee if the buyer closes?

I know all of you are honest and would pay me :wink: without a contract but I need to make sure. Thanks for all the input it has been great help.

Justin,

Thanks for your praise :cool: .

Let me say what I see after your new informations:

$1,7 million for 45 units all 1 bed, hui ... thats a high price, okay I found a College (0.6 miles) and a University (1 mile) nearby, so it´s clearly the building is for the students;
the Seller said $256k gross and $175k NOI, thats only 30% from the gross for expenses, I think thats not correct, at the pictures what I saw the building is not so good outside, but these pictures are from 2007, so the condition can be better today;
I take the 50% rule, 50% from $256k is $128k, thats realistic. For a 10% CAP Rate the sales price must be $1,28 million, with $1,7 million its only 7.5% CAP.
Other with the assumable mortgage of $1,175 million at 6%, now you have a CAP Rate of 10.9%, a adequate downpayment of $225k from the buyer and you have a max price of $1,4 million, not higher and depending on the condition in- and outside.
Thats my statement with the know informations.
Please forget these 95% occupancy for the next 3 month it´s only a promotional tactical, even given for 3 years it´s not $300k worth.

-Uwe

I´m curious about it.

-Uwe

Thanks Steve for directing me to Rich's blog.