25 unit Apt Bldg
Cap Rate: (Potential) 8.50%
Price paying (Per Sq. Ft.): $ 60.77
Price per unit $ 4 4,000.00
Gross Rent Multiplier 6.62
Expenses per unit $ (2,906)
Expense to Income ratio 43.72%
Income per unit (Monthly) $ 553.86
Average Sq. Ft. (Per Unit) 724.00
Debt Service Coverage 1.37
Cash Flow (BT) $ 2 5,441.51
ROI YR.1 (BT) 11.56%
Also included is 1 house that is rented. worth 100K
Currently 92% rented
Renters pay no utils
Seller is motivated
Seller will finance @ 6%
Seller wants 100K down
1. Is this a good deal?
2. I do not have 100K. How can I structure this deal to make it a win win?
I was thinking deferred down?
Any other ideas? Suggestions?
Income & Expense 25
Proforma Budget Units
( average rent is $580)
Gross Potential: $ 175,440
Vacancy & Bad Debt: 7% (12,281) Monthly(actual 92% rented)
Adjusted Gross: 163,159 $13,597
Other, Misc. & Laundry Inc.: 3,000
Gross Operating Income: $ 166,159
Administrative: Expenses Per unit % of Exp
Management Fee 4% $ 6,646 $ 266 9.15%
Trash, Lawn & Snow $ 1,000 $ 40 1.38%
Repair & Maintenance $ 10,000 $ 400 13.77%
Electric, Gas, Water $ 14,000 $ 560 19.27%
Insurance $ 6,000 $ 240 8.26%
Replacement For Reserve $200 $ 5,000 $ 200 6.88%
Tax (Real Estate) $ 30,000 $ 1,200 41.30%
Total Operating Expense: ($72,646) ($2,906)
Net Operating Income: $ 93,513
The asking price is $1Mil (seller financing)
What should be my max offer or terms?
The upgrades that could help future value are:
1. seperate utils
2. energy efficient windows
3. exterior new siding
4. spruced up landscaping
I don't think the expenses are accurate. I don't see legal fees, evictions, etc. Maintenance looks low.
Anyway, here's how I see this deal:
Gross Rents: $14,620 per month
Operating Expenses: (50%) $7,310
Mortgage Payment: $7,164 (20 yr, 6%, $1 million) this assumes you can borrow the $100K downpayment with 6% interest, which I don't think is possible)
Monthly Cash Flow: $146 per month or $5.84 per unit per month OUCH!
I certainly wouldn't do it for $5.84 per unit per month.
You would need to buy this at about $670,000 if you wanted to make $100 per unit per month positive cash flow.
It looks to me like it's being sold because it doesn't make money!
1. What is the breakdown of #'s of bedrooms?
2. Offstreet parking?
3. Other amenities? Pool?
4. Garden apartments? Common shared entrances? Townhouses?