Advice on a Sticking Point On A Deal

[Bruce Harding]

Looking at a mutlifamily with over 20 units.   Last roofed and sided in 1996.

Owner asking for a certain price but I found out the roof will probably last another 5 years at best.

Class C property would generate $50K year NO.

Would be taking a non recourse 5 or 6 year interest only mortgage loan on property.

If owner does not provide concession looks to me like I would have to walk on the deal ?

[Hattie Dizmond]

I agree with Joe. Regardless of the hangup, it still comes down to the numbers. Get the roof inspected and get a quote. I don't know where the property is located, but here in North Texas, 5-years is a long time for a roof, because a single hail event can wipe that roof out every year, and then it becomes the insurance company's issue. But, you should be accounting for CapEx repairs in your cash flow model. And, as a CapEx expense the roof would give you depreciation benefits on your taxes. See if you can get additional concessions from the sell, once you have an inspection report. But, don't walk away just because you can't. Run the numbers and let the numbers guide you.