What would you offer?
Looking at a Quadplex in a nearby city. Just curious how much you would offer, and at what point you would no longer consider buying.
Background
4 plex - located in a C+ area. Half a block off the frontage road to a very busy major highway, but great access to everything in town. Surrounded by other efficiency apartments, duplexes, and quadplexs.
Almost 50 yrs old. 3/4 occupied. $650 x 2, and $550 x 1 (10 yr tenant).
All units are: 2/1.5/0 with patios, and 2 parking spaces.
Ask: $220k (55k/unit) --- similar aged duplexes are listed for 60-70k/unit, but small MF 8-units in C/C- areas are listed from 28-35k/unit.
Total square footage ~4400
Taxes: $2800
Owner pays sewer/water: $250/mo average
Insurance quote I got was: $3636/yr
Figuring 8% for PM, and 10% cap ex and 10% maintenance/repairs.
The vacant unit was in very good condition, but had not been updated in several years. Minimum - new carpet (or hard surface flooring in major living areas, stairs, and bedrooms), possibly some updating in the bathroom (toilet, shower insert, tub), and either large hole patching in the parking lot or repave the parking lot (no estimate on this yet)
Appraisal from local appraisal district = $126k
The property is great in the < $164k range by my numbers. My goal is to get ~$100/unit/mo cash flow with the above estimates for PM, cap ex, and maintenance/repairs. That way, if I self manage - I am closer to $150/unit/mo, but I don't have to depend on self managing to be profitable.
So how insulting is it to come in around $130k, if I want to end up around 160k? Looking at 20% down and 20-30 yr notes.
The property is owned by an investor group that bought as part of a package and now are offloading a few of the properties that they bought at a discount. Should I be concerned? Investor to investor, should I pitch seller finance as a way for both sides to win?
Thanks