14 unit commercial property

[Edward Kiser]

I recently came across a 14 unit building that includes 3 store front units and 11 apartments. The location is decent, I'd say the building itself is C class with value add potential. All units are rented. I think this is a great opportunity however the building needs some updates and I'm not very savy on the commercial side. I can also email you the the full listing from the broker if you would like. Thanks for the help! 

Asking price is $595k 

11.4% cap

Gross income $134k

Gross expenses $63k

Net operating income $68k

[Greg Dickerson]

@Edward Kiser what info are you looking for?

Numbers sound good assuming you can validate them. That's a pretty high CAP rate which usually indicates a rough area or rough property.

Best bet would be to get a local GC or commercial inspector to look at the property for you.

[Edward Kiser]

Originally posted by @Greg Dickerson:

@Edward Kiser what info are you looking for?

Numbers sound good assuming you can validate them. That's a pretty high CAP rate which usually indicates a rough area or rough property.

Best bet would be to get a local GC or commercial inspector to look at the property for you.

I'm just looking for general thoughts, and advice for a first time investor on the commercial side. The area isnt the best and the building is old. A lot of HUD, however there are alot of incentives in the area for investors to try and re vamp the area so to speak. I think the location has good potential.

I have the means to the capital for a down payment however how do I structure rehab costs and paying investors back? Value add then refi money and pay everybody back plus a percentage? I'm not sure how that would work 

[Bjorn Ahlblad]

@Edward Kiser have you seen the property and validated any of that data. Those numbers are vey appealing for sure. You want to inspect the property and rent roll along with all the paperwork associated. All the best!

[Edward Kiser]

Originally posted by @Bjorn Ahlblad:

@Edward Kiser have you seen the property and validated any of that data. Those numbers are vey appealing for sure. You want to inspect the property and rent roll along with all the paperwork associated. All the best!

I drive past the building everyday on my way to work but I haven't been inside yet. I do have the rent rolls which verify this. Any other documentation that I may need to verify this info? 

[Bjorn Ahlblad]

@Edward Kiser the leases would be good to get along with a T12 if they are willing.........the more the better. A statement of income and expenses would tell you what has been spent on maintenance and repairs as well as income of course. What has been holding you back? How long has the property been available? Why has no one bought it? Any vacant or boarded up buildings in the area?

[Tim Delaney]

The numbers look pretty solid, but you need to verify. I purchased an 11 unit mostly commercial earlier this year and the maintenance costs are more than double what the seller presented and that doesn't even cover the major deferred maintenance and improvements that I am trying to get taken care of. I'd be happy to look over the details with you if you want - just send me a message.

[Edward Kiser]

Originally posted by @Bjorn Ahlblad:

@Edward Kiser the leases would be good to get along with a T12 if they are willing.........the more the better. A statement of income and expenses would tell you what has been spent on maintenance and repairs as well as income of course. What has been holding you back? How long has the property been available? Why has no one bought it? Any vacant or boarded up buildings in the area?

Thank you I have asked the realtor for that info. Also this is a big jump for me but I have decided that larger multifamily (compared to residential) are the route I want to go. I have been under the impression that only multi millionaires are able to invest in property like this. 

It has been on the market for a few months which does concern me, I asked the realtor why and he was not very specific. I'm trying to figure out what the hidden factor is. 

The building is in a smaller town (pop is under 20,000) that is blue collar/ rural. However the town has potential and is not far from a lot of growth in the Pittsburgh area. Currently next to an older HUD apartment building that is pretty rough as far as tenants and condition. On the other side of the street are newly opening restaurants and small mom and pop stores.

[Edward Kiser]

Originally posted by @Tim Delaney:

The numbers look pretty solid, but you need to verify. I purchased an 11 unit mostly commercial earlier this year and the maintenance costs are more than double what the seller presented and that doesn't even cover the major deferred maintenance and improvements that I am trying to get taken care of. I'd be happy to look over the details with you if you want - just send me a message.

I just sent you a request to connect that way I can message you. Would you mind taking a look at the listing? 

[Tim Delaney]

@Edward Kiser sure, send it over.