Purchasing an apartment

[Taylor Witt]

Hello BP Friends,

There is a 12 unit apartment that I came across which is really nice.  The current owner has owned the property for a little under a year and has updated the entire interior with new carpeting throughout, there have been some other updates, and the rents have been raised recently.

My questions are; 

-Should I still plan on underwriting for roughly 50% maintenance?... because they are advertising only 35% maintenance on the pro forma and are justifying this because of all these updates that have been made.

-Because the rents are now higher, should I underwrite with the new, higher, rental prices?

-Anything else I am missing or should be taking into account?

[Michael Le]

Your 5-year plan can't be more than you just wanting larger properties in 5 years or that you've heard other people do 5-years. My deals are planned for 5-year hold too but that can only happen if you have add value so you can force the appreciation. At least if you're looking for the 16-20% IRR in those 5-years.