Valuation/Offer for Distressed Asset

[Ron Steele]

I've never purchased a distressed asset. They were always stabilized or semi stabalized. I have a property thats 56 units. Its an REO and from the operations its 89% occupied and still slightly losing money.

From examining the operations the bank is running super overhead on a small property, consisting of 4 full time employees, high management, and it seems to be poor collections and just poor management in general. 

Anyways how do you value a property when it doesn't make money or is distressed. I always look at the noi/cap, but in this case the NOI is zero but I do know the caps in the area.

My plan would be to stabilize the asset, then refinance.

Thanks in advance