BiggerPockets

Hey everyone I found another buy.

I talked to a real estate investor that is ready to get out of the market. He is ready to start unloading all his investments. He is 67 years old and ready to start getting out of the game. I am 26 years old and ready to get into the game.

I talked with the real estate investor today. My uncle who is paralyzed setup the deal. My uncle has 15,000.00 I have 15,000.00. I will do all the work to keep up the unit because I already have 4 units and know how to keep up rental property.

In all the excitement I told me uncle that we would do the deal 50/50. Now that all the "love clouds" are settling I began to think about this. I am putting up the same amount of money. I will do all the work. And we both get 50/50?

Here are the numbers for the units:
70,000.00 for the unit:
450
300
300
400
300
400
500
2650
Insurance 200 a month
Repairs 200 a month
Tax 300 a year

80,000 for the second complex:
450
600
450
400
400
450
2750
He pays the untilities for the people: 900 a month
1850
note: 65,000 = 700 a month for 20 years

200 insurance
200 repairs
300 a year taxes

150,000 for 13 units and 2750+2650=5400.00
expenses about 3800.00 = cash flow = 1600.00 per month
What do you think about this deal?

Would you agree with my numbers?

Thanks for the reply. I appreciate your advice, thank you very much.

I do my own repairs with my crew

Travis,

I think it looks like a good deal, at least on paper. Having said that, I never buy apartment buildings if I have to pay for the utilities (especially the heat). That can be a disaster: utility prices are volatile and tenants waste utilities when they don't pay for them.

Obviously, you didn't list all the expenses that you will incur, but the amount of money you allocated for expenses (in which you included the mortgage payment), seems to be adequate (other than the utilities issue).

Here's how I would evaluate this deal:

Gross rents: $5,400
Operating Expenses: $2,700
NOI: $2,700

Mortgage ($150,000, 30 yr, 7%): $998

Cash Flow: $1,702 per month or $130.92 per unit per month (very good)

Again, my big concern would be the utilities. Being in a southern state, this may not be as much an issue as it is in the northern states. At a minimum, I would require the seller to provide utility receipts for the past 2 years for your review.

Good Luck,

Mike

Thanks for all the replies. I am talking to the bank as of right now. I got to go through all those procedures. I will get it done thought. I talked to the president of the bank. Then someone fell in the lobby and bumped their head on the counter. I told him I would come back at a better time. The old man's leg gave out on him. He seemed ok though. Crazy day Friday though. I never saw anything like that.

I will go finish the meeting monday. Anyone have any tips when dealing with these guys? I used to deal with a loan officer but because my deals are become bigger I have to talk to the president now. I know everything will come together though. The only problem is that he now wants 25-30% down in order to do the deals ; / He is playing hard ball with me. I will break him down though. I knowing this is a good deal I do not see how the numbers can't work. He has to see it too. Thank, for the replies.

Any tips would be appreciated greatly.

in Wisconsin you can call the utility companies to find out what the past bills have been. Not sure about your state but it never hurts to ask.

Thanks
Rich

Good luck with the bank. Sometimes they can be pretty stupid. You can always assign the contract to someone else for a fee if unable to get the deal done yourself. I'd like to be first in line if it doesn't work for you this time. Rich.

Thank everyone for the replies.

We will see what happens. I plan on getting everything done this week. I'll keep my fingers crossed. I expect everything to fall into place though. I will make this happen.

Travis, how is this deal coming along?

I'm getting an electrical inspection thursday at 9:00 am. I am calling an appraiser tomorrow. Will keep everyone updated: )

Sounds pretty good Travis. I bet you are getting really excited.