92 units outside of Houston; need help analyzing deal.

[Chris Murdien]

Hello BP Investors.

I came across someone selling their 92 unit apartment here just outside of Houston. The seller and I are at a standstill on negotiating (she wants non-refundable earnest money), so I could use experienced apartment investors to help me analyze this deal to see if its worth putting up the earnest money to get this under contract. #help!

[Steve Hall]

@Chris Murdien My guess is that the seller thinks you are a tire kicker and she is asking you to throw down some hard money to prove that you are serious. Your delay in response to her request is showing that you are not a serious buyer by the hour. (or at the very least, that you don't know how to negotiate.)

There are a lot more questions that @Nick Rutkowski should have asked. In fact, I am not sure why the price even matters. My first question to you would have been: "Have you done as much due diligence as you can to find out if it's a good deal?". Do you have a T-12 P&L and RR? Did you ask for copies of leases? (even though you probably won't get them before an offer.) Did you verify taxes and insurance? Is it in a flood zone? Is it properly zoned? Any liens or back taxes? How's the vacancy rate? Is there any deferred maintenance? Did you drive by?

My next question would have been: "Do you have everything lined up (down payment & lenders) so that you can actually purchase the property?"

If the answer to both questions is yes, then negotiate with her! Tell her you will put down $x as soft money, and in x days it will go hard. Write it into your contract. Make sure that you walk ALL 92 units. Make sure that if she needs to get you documents, like bank statements, or receipts, that the contract specifies that she must do that in x days (or your hard money down payment requirement will be extended) Just CYA (cover your ***)

Hope that helps...