Deal or No Deal - Did I ask the right questions

6 Replies

I have a lead on a 20 unit senior apartment building that's fully occupied in St. Clair County Michigan.

-Building needs no work recently upgraded cabinets, appliances, and windows

- 10 acres of land

- 1-2 bedroom units paying $500-$750 a month

- Gross rents $125K 

-Net around $90k

I feel like I didn't ask enough questions what am I missing ? I already know the price.

Gross and net numbers do not confirm to 50% rule - net should be 50% of gross.

Ask the seller to provide operating statements for the last 24 months and rent rolls.

Look at all maintenance/management items and find out why expenses are unusually low.

@Cierra Seay  

Probably in the operating statements but ask to see proof of income side of things too. Are they really getting the income they claim? Are rents paid on time? Are good leases in place? What kind of turnover/vacancies do they have?

What type of construction? what type of roof? (will have an effect on costs going forward)

Who pays utilities? 

Those expenses are too low, they're not telling you everything, not surprisingly 

Read “Insider Secrets to Financing Your Real Estate Investments” by Frank Gallinelli. That will give you a good overview of looking into a multifamily property

Thanks @Jean Bolger when he told me the net I was thinking they were quite low as well but with it only being 20 units I thought maybe there wasn't much maintenance and upkeep and we mentioned they recently did a lot of upgrades. The building used to be a hospital. I will take a look at that article. 

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