Updated over 8 years ago on . Most recent reply
44 Unit apartment Giving 20% of NOI and 20% of Equity..and more!
Good Evening Ladies and Gentlemen,
I'm looking for an equity partner that has experience in purchasing 40+ unit apartments. The 44 units are 11 buildings making up 44 units. 41 of the units are occupied and each unit is a 2 bedroom 2.5 bath. Rents range from $725 to $800 and are currently below market of $1,000. Now for the good stuff. Get your pen and paper (or spread sheet) ready.
The property is located in a B-/C+ area
18 of the units are at-will tenants
23 of the units are on a current annual leases 13 of which are due for renewal between June and November. (will raise the rent at end of lease)
Current monthly rent is $30,720 = $368,640 GSI
Current Vacancy is 7% (market is 5%) = $342,835.20 EGI
We don't know Operating Expense yet so I used 45% after deducting EGI = $154,275.84
Net Operating income = $188,559.36
Owner is asking $65K a door = $2.86M
About a 6.5% CAP
I am interviewing property management companies this week. I have two lenders I am considering because they are quoting a 4% to 5% interest rate and up to 80% LTV (however I need someone with experience to show the bank credibility).
Since I will be short on down payment, I am offering 20% of the NOI and we split the other 80% of the NOI, and 20% of the equity cash out at sale. I do plan on holding this property for at least 7 to 10 years. I also plan on asking the seller to carry back 10% of the purchase price and/or grant the buyer $140,000 credit.