I have a seller that wants to sell there 167 unit apartment complex its 89% occupied has a 8% cap rate and it is located in a emerging market. The seller is asking 5.9million I got them to agreed price of 5.5 million it's worth 7.5 million. I don't have the earnest money to tie the deal up what should I do next? I think this is a great deal and I don't want to lose it what should I do to maybe get more time to find the resources to get the deal done
You don't list any information on your profile, so I don't know how much prior investing experience you have, but I am assuming by the way you phrased your question (a lot of what you wrote there doesn't make much sense, frankly) that you have not invested in larger multifamily properties. If that's the case I think you need to slow down and get some education in commercial investing before you try to pull the trigger on a deal of that size. You can learn a lot by browsing/searching the forums here on BP. I also always suggest that anyone interested in multifamily read “Insider Secrets to Financing Your Real Estate Investments” by Frank Gallinelli, which is available on Amazon.com as either a kindle download or as a book. Good luck!
Orlando are you keeping the property your self or wholesaling. I suggest you network with people in your local market.
I am looking to wholesale it
"89% occupied has a 8% cap rate"
Orlando this means nothing until you verify it.
You need to view the rent roll from the seller. Then match that up to market to see if stated rents are at market, above, or below. You need to ask for trailing 12 to 24 months occupancy and books. If seller has 89% CURRENT OCCUPANCY that means nothing. They could have placed crappy tenants or given rent credits and waver of security deposits trying to show inflated rents and income.
Once market rents are verified then take gross expected rents and chop off 60% in annual costs to get NOI if landlord paid utility. Take NOI divided by purchase price to get cap rate. See if an 8 cap is low for the area, high, or average for what things are selling at.
No legal advice.
I am having a hard time getting the info from the seller they want me to sign a contract and send earnest money before I get that info and I am like no it's not gonna work Like that I ask if they. Would give the information to me if I sign a confidentialty agreement All that was given was a LO I that's all
telling me to rest assure that my money is refundable if I don't approve of the numbers something don't sound right to me
Well I just got off the phone with the agent and she said that it is custom for deal in Missouri for the seller to ask that earnest money be held at a third party tittle company where my money is refundable the buyer will not have access to the money. Also she said that the seller is willing to go as far as to allow me to have an estoppel in place to make sure the tenants pay what and how long they have been and also certify the rents at the time of closing so what do you think
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