Potential apartment building deal....How do I make it work and is it worth it.
I'm looking into getting my first buy and hold. After looking for multifamily properties a casual conversation with a coworker turned into the potential for me to buy an apartment building from her relative. Here are the details for the buildind and the deal.
It has 6 apartment units and 3 commerical store front properties. All residental and commercial tenants pay for gas and electricity The income on the property is
Commerical Units: $3975/mth
Apartment Units: $4995/mth Monthly Gross: $8970 Yearly Gross:$ 107,640
Expenses (figures were give by the seller):
-Taxes $11,000
-H2O Bills $3600
-Insurance $7800
-Maintenance $6000
Total Expenses: $28,400
The seller is looking to sell the building for $975,000 with $200,000 down and carry the note for 15-20 years. The monthly payment for 15 years breaks down to $5,830 or $69960/year. Leaving $9,280 as cashflow for the year. CAP Rate of approx 8.6%
After looking at the building I can tell there are lots of ways to add value to the apartment units because they haven't been updated for some time. My biggest questions are does this look like a good deal? And if it is, how would I go about getting the down payment at a cheap enough rate to still have decent cashflow. Private Investor, Convential Loan, Partner, what would be my best route at securing that much money for a buy and hold deal and at that point does the deal still make sense?
Thanks for any feedback.