Looking for investors that buy Subsidized Multifamily Complexes

[Tyler Rusomaroff]

Here's an extremely rare opportunity to purchase a well run and well maintained 40 unit multi-family complex an hour outside of Orlando in booming Lake County. The government subsidized property consists of 8 concrete block buildings with a total of 40 units. The mix includes (13) 1/1 units with 529 square feet, (16) 2/1 units with 666 square feet, and (11) 3/1 units with 1000 square feet. Utilities are partially paid by the owner with the majority covered by a monthly utility allowance. All roofs are being replaced this month. The property comes with a 20 year HAP (Housing Assistance Program) contract with approximately 15 years remaining, providing automatic rental income from the start. One unit is currently vacant and being rehabbed and the other 39 units are performing. This property has always had a waiting list of HUD-approved tenants ready to rent. Current yield is 9% to 10% and with a booming rental market and regular rent reviews, this yield can continue increasing.

[Serge S.]

@Tyler Rusomaroff I own section 42 LIHTC and can tell you this is a very different beast to underwrite. Value add while in the program will be the delta of max allowable rent to average in place rent. You need to understand all of the administrative costs such as constant recertifications, audits, etc. Tenants are extremely rough on the units. You are generally underwriting some losses in the first years. Its crucial to find the right manager. If you are not close to the qualified contract period or in a state where you must fulfill the LURA I would not mess with something like this unless I had experience. You need to buy at a significant discount to market to make these work and today these are not being offered at adequate discounts and being sold to inexperienced operators who find out too late that they bought long term losses and terrible tenants.