What do you think of this SeaTac MFH?

Multi-Family and Apartment Investing
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What do you think of this SeaTac MFH?

David S.
Investor · Bay Area, CA · Member since 2014 · 165 posts · 45 votes

I am thinking of investing in a syndication that is buying a 157 unit apartment project located at 3117 S 192nd St. in SeaTac, WA 98188.

It appears the property last sold in 2015 for $1.8Mn….the syndicators now plan to buy this property at a price that is about 60% higher and around 10.8X trailing 12 months gross rental income or 9.7X gross income projected over the next 12 months.

They plan to renovate the units and increase gross rental income by 11-13% in each of the next two years and then level off at 3% annual rental growth thereafter. There does not appear to be room for reduction in operating expenses.

I am doing my own due diligence but would also like feedback from others in the local area as to what they think of the location, the property and prospects continued growth in the area and for increasing rents. Do you think the local market can support $1100 for a studio, $1500 for one bedroom, and $1775 for 2 bedroom units?

Also, what would be a reasonable expense ratio (operating expenses/total revenue) and cap rate be?

Thanks in advance for your input.

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  • Account Closed
    Specialist · Paradise Valley, AZ · Member since 2018 · 3k+ posts · 2k+ votes
    8y
    Originally posted by @David S.:

    I am thinking of investing in a syndication that is buying a 157 unit apartment project located at 3117 S 192nd St. in SeaTac, WA 98188.

    It appears the property last sold in 2015 for $1.8Mn….the syndicators now plan to buy this property at a price that is about 60% higher and around 10.8X trailing 12 months gross rental income or 9.7X gross income projected over the next 12 months.

    They plan to renovate the units and increase gross rental income by 11-13% in each of the next two years and then level off at 3% annual rental growth thereafter. There does not appear to be room for reduction in operating expenses.

    I am doing my own due diligence but would also like feedback from others in the local area as to what they think of the location, the property and prospects continued growth in the area and for increasing rents. Do you think the local market can support $1100 for a studio, $1500 for one bedroom, and $1775 for 2 bedroom units?

    Also, what would be a reasonable expense ratio (operating expenses/total revenue) and cap rate be?

    Thanks in advance for your input.

    I have done three flips in that area over the years of SFR. It is trending "rough" for a neighborhood. with lots of new arrivals to the country from places that don't speak english. You'd want a property manager who speaks their languages. It's outside of the Seattle city limits and that is good if you are a landlord. The city of Seatac is extremely easy to work with. The police are very busy. That building is next to the take off & landing of Seatac airport. Very busy Airport & there is quite a bit of jet noise. That building has easy access to bus routes for the tenants so that's a plus. But, area prices are sky rocketing and there is no knowing where the "Top" is. I haven't done multi-family so I can't speak to what rents would be reasonable.

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  • Bjorn AhlbladPro Member
    Investor · Shelton, WA · Member since 2017 · 6k+ posts · 6k+ votes
    8y

    What Mike M said sums it up. What is the exit strategy for the syndication?

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