Help me look at this deal?

Question

Hello All,

I have a 4 duplexes that I dearly love and don't owe very much on them.  I've just recently started trying to look at debt differently based on BRRR and so I'm looking at bigger.  I wouldn't mind finding a partner who's a little shy on equity and high on experience.

This just looks like a really great deal to me, unfortunately this is the first apartment building I've looked at.

Bainbridge is a high end area and I estimate rents should be $23k/month, double the current rents.

I don't know anything about expiring rent controls.

https://www.redfin.com/WA/Bainbridge-Island/550-Madison-Ave-N-98110/home/2261811

Anyways, let me know what you think.

Thank you for looking at my post.

Gary

Gary Abner · Answer

It sold for ~2.1 million.  It had 14 offers.  :)

Thanks to all that took a look.  It was definitely under priced.

Geordy Rostad · Answer

Something is drastically wrong with the numbers they are posting. Look at those expenses. Wow!

I think you're right about the rent though. You need to get the real rent rolls and expenses into your hand to decipher what is going on there.

Bjorn Ahlblad · Answer

@Gary Abner I have a 12 unit that we self manage. Having all your tenants in one location like that gives you tremendous economies of scale compared to SFR and duplexes.

You might need to nail down those 'expiring subsidies' what is that all about? The city of Bainbridge Island has apartments they rent and they promote affordable housing with those units. What impact that would have on a LL would need to be uncovered. Interesting opportunity. All the best!

Bjorn Ahlblad · Answer

@Gary Abner exactly what @Geordy Rostad said. There is something going on with those expenses. I'm thinking a bunch of maintenance had to be undertaken and the costs were taken in last year. Gary, you say you can increase the rents; but you are talking about doubling them. Is that really doable? That would change things completely.

Gary Abner · Answer

Hi Geordy,  Very true, your money is made or lost on the purchase price.

sorry to hear you lost out but they'll be more

I did cash outs and went from 8 to 20 doors since this post. Still only 3 of 10 properties have any mortgage on them. I cant buy more until I find a CPA and get my delinquent taxes done. :)

Take care and good luck!

Gary

Geordy Rostad · Answer

@Gary Abner

Thanks for reporting back. I got skunked on a 7u today in Spokane that ended up with 10 offers so I know the feeling. It gets old losing out on deals but it would be worse to overpay and lose money every month.

Help me look at this deal?

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