Submitted my first letter of intent on Master lease with option
I'm excited. The seller has already stated that he would entertain a Master lease.
After walking down the property and neighborhood I decided that this was the perfect storm for this strategy! A subrenting building (23 units) with room for rent increases. A motivated out of country investor. A Negatively cash flowing building. A building with only minor cosmetics needed on the interior.
Here are some of the numbers:
Current NOI/Projected NOI = 55000/108405
Expenses = 95,648
Asking Price = 1.05 Million
Market Cap Rate for the area = 12-14%
The asking price is really high considering the negative NOI. But I believe that the seller was using the building to report a loss on his more profitable investments. Which is why he decided to keep the rents so low.
Wish me luck!