Calling investors with experience, need to breakdown a MF deal

[Stephen Jones]

Experienced BP investors,

I am in the process of potentially purchasing a 30 unit multifamily apartment complex. It would be greatly appreciated if someone could reach out to help me breakdown this deal. I would just like to get a 2nd or 3rd eye on it. Different opinions and feedback always help. Please let me know and I will happily provide all information! Thanks!

[Jonathan Small]

1.2M divided by 30 units = 40k a unit in cost

226,000 rent yr divided by 12 months divided by 30 units = 625 avg monthly rent

Those are good numbers. How many condos or houses would you want to buy at 40k if they rent at 625?  This is way over the 1% rule.

I have a similar portfolio. They tenants are paying down about 2k per month due to amortization. I also get cash flow. I also get a ton of tax benefits.  I also get to claim depreciation. In short, If you don't get much appreciation then this is still a winner.  In 20+ years of investing in real estate,  I have not bought any properties that didn't appreciate. 

Seems like age of building and renovations is a risk and concern to you. Consider contacting a property management company that manages something similar in the area to get maintenance expectations. 

Look to see if any permitted work has been done.  Pull the permits and contact the company that did the work. They can give you insight to what you are getting into.

Consider contacting some GC in the area to consider process, expenses, and their experience maintaining these type of properties. 

Ask a DSCR lender if they will give a line of credit for renovations. They could give you a 100k LOC and still have debt service coverage greater than 1.25 which is what many want.

Feel free to reach out or drop me a line if you would like tips on how to maximize your due diligence for this project. I wish you much success.