32 Unit Apartment Complex Would you buy?

Question

I have a 32 Unit Apartment complex listed in a low income area but not a bad area. The town is White Hall, Arkansas. Its listed for 130k the renovation cost would be around 275K. The units will rent for $500. That's $16,000 monthly $192,000 anually. I think renovations will take about 3-4 months. I would need partners or investors. I have already gotten the bids from good contractors. My question is, is this worth doing? is there anyone on here that would be willing to partner or fund?

I am licensed Arkansas Real Estate Broker. If I'm breaking any rules with this post please delete.

Brent Coombs · Answer

@Neil Johnston, so, no JV with @JaMarcus Joseph then?...

JaMarcus Joseph · Answer

Dude I thought you were asking for advice. Both comments offered help. I have interest in the success of that city.

Lol @Brent Coombs Doesn't look like it, right!

Jay Hinrichs · Answer

@Neil Johnston  the owner of said complex has a thread going as well. asking whether they should sell or rehab.. never mentioned that it was listed for sale. so looks like you all are fishing.

if what they are saying or the other dude is saying is true and they snagged it for 16k then and they can flip it and make 100k then that's what they probably should do..

That's a huge rehab job... and your dealing with lower end tenants.. so unless its your business to run these .. I think you pass on rehab and owning.. not enough upside for al the work .. I personally have seen way to many of these fail.. best intentions but crappy tenant base just is not conducive for long term success..

The buyer for this and the one who can make it successful is going to be a local who already owns a bunch of these and understands how to run them and manage them. plus has their own contractors and crews who they can trust.

This is a non starter type of property from an investor stand point ( again unless they are local ) and if you had locals you would be getting them from MLS Not BP

Also as long as the other dude who is the disgruntled investor that attempted to buy it is not telling the truth then its all public knowledge that can be substantiated then they have nothing to worry about.. but if its BS and they are not telling the truth then that might be something to bring up... doubt you get many restraining orders sent to BP management for BP posts   LOL.

Good luck with it.. cash it out be proud these folks made a great % gain and move them to a classier investment as a broker you should have this sold .. and have them 1031` into the next deal you find for them... set them all up get commissh on both...

JaMarcus Joseph · Answer

Hey Neil

I know the complex you're talking about. I did some due diligence on it. That area is a growing area. According to one of the city code enforcers, that's where all the money will be at in the near future because industry is coming to that area. Also the high school is 2 blocks away from the elementary basically across the street.  There's also a Tyson Chicken down the road. If all else fails, the city says there are about 70 unfilled housing vouchers for quality 1-2 bedrooms. It'll be a real cash cow even if you don't hit market rents. Also, the lot next door offers room for growth.

Have you spoken to the city about the repairs required to meet current code? Do your repairs include the new overhead fire sprinkler system required by current code? Are you keeping all the electricity on the single meter? How does the single meter effect your NOI? Those utility bills are going to eat the budget. Do you have a plan for that? I think you should contact Ron Hughes with HERS, INC. He does energy efficiency assessments. He'll point you in the right direction of green tax credits and potentially monies. For example, Centerpoint energy offers a $600 rebate on tankless hot water heater systems.  Entergy offers some sort of rebate for energy efficiency efforts. In the short term, solar panels don't seem logical. However, on a project where the landlord pays all utilities, the long term would be extremely beneficial. Using internet sources, I calculated the monthly utilities to average upwards of $90 per unit with standard methods. Energy efficiency can save an average of 60% in utilities or more. I think it could get down to about $15-25 per unit range with the right modifications.

Anyways, I've rambled enough. I think it's a good buy if you're not afraid of the area. It's also a good flipping market. I hear it has a reputation for big time apartment buyers out there when they're performing.  PM me if you want to chat about my experience with the sellers. It's positive. They seem like decent people.

JaMarcus

Doug N. · Answer

It sounds like he's trying to sell it for you!

If you get a restraining order, will that cancel his commision split?

Neil Johnston · Answer

i'm not listing broker anymore so he can do what he wants

Jay Johnson · Answer

Brent,

That's, pretty, funny.

Jay Hinrichs · Answer

@Chris Seveney  nothing wrong with a broker buying their own listing... the agency disclosure is acknowledged up front... now if he brought in a straw buyer that would not be good.

Chris Seveney · Answer

I am not in the area or have interest -I do have a question though -  is acting as a listing broker and trying to purchase a property that is your listing a conflict of interest ?

I would think it would be.

Neil Johnston · Answer

I've heard you are trying to cause problems for the sellers because you can't buy. My suggestion as the listing broker stop harassing the sellers before they get a restraining order.

32 Unit Apartment Complex Would you buy?

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