Would anyone care to share their process for analyzing a deal? I'm considering investing in a Apartment building rehab and trying to determine if its a deal. I created a PDF of the deal points to summarize it. An IRR of 21% seems low for commercial property is it not?
Is this you proforma or somebody else's? Either way, P&L portion is missing. Without it, there is nothing to analyze. 21% ARR is great if you can get it. However, see above.
I'm sure the company wouldn't appreciate me loading the presentation. All good questions you have and something I'm more versed in. The actual projected returns is my weak part.
I've had a less than 1% vacancy is this market on another building so I think 3% is safe. And I assume they factor payroll using their inhouse property management co. but I agree I'd probably 2-3x that.
Send the following information and I will put the numbers in my software and see how they come out
number units
last years total for expenses including the property tax you will pay, add management costs if you will have a property manager and include every expense except your mortgage payment.
gross income purchase price down payment your closing costs total loan amount interest rate how much do you think you can increase rents within a few months after escrow closes how much can you increase rents every year do you have major capital expense expectations.
I'm sure the company wouldn't appreciate me loading the presentation. All good questions you have and something I'm more versed in. The actual projected returns is my weak part.
I've had a less than 1% vacancy is this market on another building so I think 3% is safe. And I assume they factor payroll using their inhouse property management co. but I agree I'd probably 2-3x that.
If this is 506c offering, they will be glad you've published it. What if they gain more investors that way?
I'm interested to hear more about you software and how it analyses the data below
number units-29
last years total for expenses including the property tax you will pay, add management costs if you will have a property manager and include every expense except your mortgage payment. $190,783
gross income $384,298
purchase price -$5,320,000
down payment
Equity Target
$2,024,280
Company Holdings (10%)
Investors (90%)
$202,428
$1,821,852
Acquisition/Rehab Debt
$5,066,250
(75% LTC, 3.75% Interest Rate)
your closing costs
Escrow and Closing Costs
$30,000
Escrow, legal, due diligence reports
Loan Cost
$44,330
Lender loan fee (.875%)
Reserves
$75,000
Cash reserves
Acquisition Fee
$186,200
Loan guarantee, organizational efforts
total loan amount $5,066,250 +
Investor Equity
$2,024,280
interest rate 3.75%
how much do you think you can increase rents within a few months after escrow closes
how much can you increase rents every year- They are estimating 40% year one and 3% per year thereafter.
do you have major capital expense expectations. Renovation Costs $1,435,000