Need Help on My First Potential Complex Deal

[Jeremy F.]

After buying a few duplexes over the last year and a half I have recently been looking at complexes in my area. I found one that might have potential but of course there is a problem. The listing agent is not providing any financial information and isn't really communicating with us at all. We were able to take a look inside one of the units and that is it. So I am looking for advice on two things:

1. How to get the sellers attention.

2. Opinion on the deal (using the little information I have).

I was thinking of just putting an offer in to solve problem #1, that way it would force the listing agent to show the seller that there is someone interested. I could always renegotiate or back out if something critical came up during inspection/due diligence. 

The building is a 28 unit class C building, listed at 1.5m. 3 bedroom 1.5 bath for each unit. Rent is $22,400 monthly (fully rented, there are two units vacant right now). There is definitely deferred maintenance, about 12k-15k per unit.  Will be able to increase rent by $50-75 worse case scenario per unit as I repair them and put better tenants in over the first few years (do not have cash to do it all at once). 

Using the 50% rule I was thinking of offering 1.2m or 1.3m due to all the updates that will need to be done to the units. Nervous about this considering I have so little information on the property however, based off  the numbers of similar properties I have analyzed, the 50% rule is in the ballpark for this property.

Does anyone have any advice or insight they can share? Maybe something from a different angle I am not seeing? What would you offer or do in this situation. I am ok walking away but if there is potential here I want to at least try. 

[Ben Leybovich]

Jeremy.

How to get seller's attention? Go hard on some money.

Now, toss rules of thumb out the window. You should make your offer based on your underwriting. For instance, when I offer, I know what the expenses are going to be within a couple of hundred dollars. I don't care what the seller says his expenses are. When I buy, I know what numbers I am likely to hit.

Same for the income. 

My opinion on the deal itself is that it's to small to systematize the management, so you'd be buying a job. Make sure you price that in.

Good luck!