BiggerPockets

The property in question, is listed for $350,000 and is generating an annual income of $62,160 with annual expenses at $34,350 which $6,000 of that is for property management. The property has been completely updated outside with: a complete roof tear off, all new concrete up to the units, sidewalks and parking lot, all new landscaping and 5 of the 10 units have been completely rehab with the other 5 in excellent condition. Currently is fully occupied with long term leases in place (2+ years as I'm told).

I recently have spoken with the listing agent asking if the seller would consider doing a LC on this complex. She has replied with "yes they will consider with a large down payment". I have the ability to put up to 20% down without placing any stress on other capital.

My questions to all is, what do you think in general about this deal? What other type of information should I be asking the listing agent?

This will be my first commercial deal in my career and I'm looking forward to the knowledge and advice that I will receive from BP.

Greg

Greg - what is your strategy for this property? Hold for the cash flow?

Are the rents in line with the market rates? If not, you might be able to bump up the rents and quickly increase the property value if your goal was to re-sell it for some cash.

If there are a lot of long term leases in place, this is good if you want to buy and hold (as long as there is good payment history on these leases). It could be bad if you want to flip for a profit because your ability to increase rents is not there.

If you are putting 70k down and bringing in about 25-30k/yr then you're looking at a 2+ year payback.

Good luck with it!

It doesn't look very good to me for a few reasons.

First, based soley on your numbers, The cap rate is just shy of 8%. I would like to see a minimum a 10% cap on a multi like this. Which would bring the purchase price to 278,100

However, since your location is Dearborn, I am assuming this property is in greater Detroit? If that's the case, with the added risk of that market, I'd be looking for a cap with a minimum of 14-15%

Quite frankly, if this deal is in Detroit, I think you can do a lot better for the amount of cash you'd be putting in.

Best of Luck!

Brian - I will not bring that amount of cash to Detroit...LOL,

The property is located in Allen Park, MI. So based on the information and numbers provided along with the amount of work the owner as put into it; you think 350k is to much? Keep in mind the property is in top notch condition, literally! I have no intentions of paying 350k for it I was thinking more in the range of 300k-310k. Should I start even lower than that? There is room to create more value in the property.

I look forward to your reply

~Greg