Charlotte NC 12 Units - Help Evaluating

2 Replies

Hi all,

I am working on evaluating a 12 unit opportunity near downtown Charlotte, NC (just out of curiosity). I want to see if my rough estimates/valuation matches the communities perspective on whether this would be a good deal or not.

Below is link to listing:

https://www.realtor.com/realestateandhomes-detail/...

Below is link to rental information:

https://www.realtor.com/realestateandhomes-detail/...

So many questions on my end here too, if any of you are familiar with a transaction this large:

- Would this be considered commercial if there are 6 separate duplexes? If it is considered commercial, how do the loans change?

- Do you take into consideration the rail going in that is opening in 2018 and connecting UNC-Charlotte to downtown? Would you expect this to decrease rent as a result of new investors building new apartment complexes?

- What price would make this a good deal in your opinion - what cash on cash ROI would you look for?

- Are my cost estimates reasonable?

Thanks for any input! 

It is really difficult to say if it is a deal, because it really depends on what your goals are for this property. Are you planning to add value and resell it? Are you planning to hold it for more than 10 years? Are you syndicating it? ... It really depends.

In addition, are these numbers you plugged into biggerpockets.com calculator your own numbers  or are these the actual numbers provided by the seller?  I wasn't able to read properly into the numbers. Also, are these pro-forma?
If you are looking to add value and sell (let's say within 5 years), then paying a 5.56 CAP is quite expensive

The property was built in 1948. That makes me suspect that there will be quite a lot of maintenance items for it. 

Looks like the property is 100% occupied. What are the chances of raising rents? What do the leases look like?

Hi @Grace Shinnick ,

These look really interesting.  Maybe these would be great cash generators but as I look at them I'm left asking myself - what value is there to be added or what upside is there?

- As for commercial loans, it's probably best if you call up a couple banks and talk to them about what you want to do.  In my short experience looking into something like this commercial loans will have a shorter amortization and shorter terms but are principally the same.

- Hard to say what affect the Lynx blue line will have but it's probably a better position to take to be into an investment that could be positively impacted by the new transit options.  What would be the best case for these properties if the blue line had a generally positive impact on the local area - appreciation?  If so, is that part of your investment thesis to exit with an appreciation gain down the road?  If so, then are these really the best properties as an appreciation play?  See links below.

- What ROI, that's up to you and really depends on what your goals are. Are you making a cashflow play and will buy and hold? Do you intend to exit down the road and are banking on appreciation.

- If you have 50% of your revenue allocated to expenses that's probably OK, it falls in line with the 50% rule which is generally taken to hold true here on these forums.  Will the tenants do their own landscaping?  You may want to put some cost in your calcs for keeping up the yards.

While these properties are interesting it does seem like much of the value is being captured by the current seller.  It's hard to see what the upside is in the medium run for you unless you are strictly looking for a low maintenance cashflow generator.

Gentrification along transit lines

https://www.citylab.com/equity/2015/09/the-role-of...

http://www.tandfonline.com/doi/abs/10.1080/1051148...

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