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20-50 Unit Apartment Building #'s

6 posts by 5 users

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Robert Mack

Real Estate Investor from Bergen County, New Jersey

Feb 09 '10, 02:32 AM


I am trying to add onto the financial part of my business plan and had some questions about apartment buildings.

My plan is to purchase a 20-50 unit building in 2-3 years with profits I make from rehabbing and reselling properties which I am currently doing.

Is it possible to purchase a 50 unit building or smaller for $20k per door with rents being around $650 per door? Location does not really matter, but I am going to look into Texas.

Also what would be an estimate for loan terms be? In 2-3 years, based on your estimate, would it be feasible to purchase the above building with 30% down 7.5% interest on a 20 year term?

I am trying to get some better ideas on numbers so I can make more accurate projections, thanks.

*If this is in the wrong section, please move it, thanks.


Edited Jun 26 2010, 11:34 by Robert Mack


Jon Holdman Moderator

SFR Investor from Wheat Ridge, Colorado

Feb 09 '10, 02:51 AM


Originally posted by Robert Mack:


Is it possible to purchase a 50 unit building or smaller for $20k per door with rents being around $650 per door? Location does not really matter, but I am going to look into Texas.

The best guess you can make at that is to search around and see if you can buy this right now. If you ask me this question for Denver, I'd say, no, that's unlikely. But I don't know your market at all. Research what's available right now, and if its close, then you have some hope of finding that three years from now.

Honestly, I think paying $20K (I assume that includes any rehab) for $650 for rent is a SCREAMING deal. You're certainly not going to be able to do that easily. Or, if the MLS is chock full of such deals, then it won't be a deal.


Also what would be an estimate for loan terms be? In 2-3 years, based on your estimate, would it be feasible to purchase the above building with 30% down 7.5% interest on a 20 year term?

Anybody who can answer this question doesn't need to worry about buying 50 unit apartment buildings. If you can predict interest rates three years from now, there are much easier ways to turn that knowledge into cash. For that matter, if you can accurately predict interest rates next week you can make money.

If you asked these questions in 2006 you would likely have gotten very confident answers. Answers that would have been totally wrong. If your business plan relies on accurate answers to these questions, then it only works if those predictions (guesses, really) prove correct.

A better approach is "scenario planning". With scenario planning, you define a set of scenarios, and determine the outcome of your business based on each one. What you outline here is one scenario. Another might be that interest rates are 15% (its happened before). What does your business look like then? Another might be deflation has set in with a vengeance and that rents for those units are only $300. ETC.


Edited Jun 26 2010, 11:34


Jon Holdman, Flying Phoenix LLC


Steve Sparks

Real Estate Investor from cincinnati, Ohio

Feb 09 '10, 03:13 AM


I can sell you a 48 in Cincinnati right now for 350K..rents more like 450..semi distressed..needs about 2000 to 2500 per unit.but that is still under 10K per unit...so yes that deal is possible if you look hard enough!


Edited Jun 26 2010, 11:34


Brian Levredge

Real Estate Investor from Chattanooga, Tennessee

Feb 09 '10, 03:40 AM


I think finding the deal will be easier than financing it in the next few years. I don't know about Texas but there are plenty of other markets, especially in the South, where you can find great returns. Unless you have some previous relationships in place, I think financing through a bank is going to become even more difficult than it already is. You may want to see if you can buy notes on distressed properties and foreclose. It may be quicker and cheaper in the long run.


Edited Jun 26 2010, 11:35


Robert Mack

Real Estate Investor from Bergen County, New Jersey

Feb 09 '10, 04:32 AM


Originally posted by Jon Holdman:
A better approach is "scenario planning". With scenario planning, you define a set of scenarios, and determine the outcome of your business based on each one. What you outline here is one scenario. Another might be that interest rates are 15% (its happened before). What does your business look like then? Another might be deflation has set in with a vengeance and that rents for those units are only $300. ETC.


Thanks Jon, this is what I am attempting to do. I wanted to see if there were other investors on here who have purchased 20-50 unit buildings and what their numbers looked like so that I can get an idea. On top of that I am going to look at loopnet and costar, I'm not sure of any other places as of now to look for commercial deals.

Brian do you have any specific markets or city's to look into in the south?
I also like your idea of purchasing the note and foreclosing although I do not know much about that right now.

I am guessing those with cash will be able to get the best discounts and best deals so another scenario might be where I bring in partners to be able to purchase a building with cash and then the problem becomes can I refinance after the building is performing... Thanks for all the input so far.


Edited Jun 26 2010, 11:35 by Robert Mack


Carlton Ellis

Real Estate Consultant from Lansing, Michigan

Feb 15 '10, 06:10 PM


Originally posted by Robert Mack:
I am trying to add onto the financial part of my business plan and had some questions about apartment buildings.

My plan is to purchase a 20-50 unit building in 2-3 years with profits I make from rehabbing and reselling properties which I am currently doing.

Is it possible to purchase a 50 unit building or smaller for $20k per door with rents being around $650 per door? Location does not really matter, but I am going to look into Texas.

Also what would be an estimate for loan terms be? In 2-3 years, based on your estimate, would it be feasible to purchase the above building with 30% down 7.5% interest on a 20 year term?

I am trying to get some better ideas on numbers so I can make more accurate projections, thanks.

*If this is in the wrong section, please move it, thanks.


In terms of rents what you are doing is quite possible in just about any large city in Texas i.e. Dallas, Houston, Austin, San Antonio, or El Paso. A key component will be finding a property in a the right neighborhood and the mix of one and two bedroom units. If you find the right property in the right neighborhood you can easily charge $600 to 700 for a one bedroom unit and $750 to $850 for a two bedroom unit and still be competitively priced.

If you buy in a big city in Texas I'd advise you to pay very close attention to surrounding neighborhood during the course of your property ownership. Because just about every major city is Texas is growing rather fast demographics of a given area can change in 5 to 10 year period. The current slow pace of economic growth might slow this down a bit. A consistent pattern in large Texas cities over the past 20 years is that as higher price property is built in the outer suburbs the more affluent people tend to move there unless a neighborhood has been firmly established as as an "Old Money" neighborhood.


Edited Jun 26 2010, 11:40 by Carlton Ellis


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