115 Unit complex purchase and rehab

[Steve Priola]

Does anyone have a risk assesment / cost analysis worksheet to use for evaluating this type of deal?

[Joel Owens]

I look at it with completely vacant versus 50% or higher occupied. Anything under 50% approaching the lower number I almost always consider that a full turn around.

If market rents are 600 you base off of 500 with a rehabbed product for fast lease up with the best tenants. Then you inch it up closer to market in years 2,3,4 etc.

From a lender perspective the appetite is much lower for the full vacant turn arounds as the risk exposure is huge.

The level of rehab needed per unit will matter a bunch on the number. Sweet spot is spending less than 3k to turn a unit with 50% or higher occupancy bought at a discount to force appreciation. Those are harder to find these days versus 3 to 5 years ago due to supply and demand. 3 to 5 years ago there was inventory but not many players. Now there is still inventory but many more players feeling the market is starting to recover they want to jump in versus 3 to 5 years ago they had no clue where multifamily was heading.