26 Units @ $649k

6 Replies

Greetings. 

Taking a look at this deal and wanted to reach for the advice/input of others, especially with regards to owner paid utilities and offer price. 

26 units @ $659k

Gross Monthly Income $10,900

Utilities $1500.00

Water $350.00

Sewer/Garbage $425.00

Taxes $450 per month (based on list price)

Insurance $500 per month

The asking price seems a little high. 

How much should (percentage wise) should an investor put aside per month for maintenance on a building this size?

Thanks and Happy 4th of July!

Jordan

436,000 at a 10 cap using 60% expenses when landlord pays water minus immediate capex needed.

So if inspection turned up 20,000 in repairs right now then 416,000.

I am basing off of 100% occupancy as you did not state it.

10,900 / 26 units = 419.23 a unit or 420. Very low income units with tons of headaches at that tenant base level.

Cap would have to be 12,13,14 for me to take that on. The cap you pay is a function of the area of the property, rent growth annually, the size of the property, and the tenant base among many others.

Joe,

What is cap ex? 

Sorry, meant Joel.

@Joel Owens   Could you elaborate on the 10 cap you mention? Are there any resources you could share?

Also, @Jordan Vires   I think we are working on some assumptions, so the numbers can be skewed and at that price, based on the 50% rule, you are really right at the point where the deal does or doesn't make sense based on some items.

Are there any repair costs associated to the purchase or are all 26 units ready to go? Also, what percentage would you be putting down.  Knowing this we could calculate a safe number you probably could go in at, which would probably not be near 659k.  Also, I like Joel's mention that surrounds the low income housing, where headaches can be a problem.

More specific figures would help but I'd be weary.

Kyle

Kyle Cabral, Real Estate Agent in MA (#009535674)
Originally posted by @Kyle Cabral:

@Joel Owens   Could you elaborate on the 10 cap you mention? Are there any resources you could share?

Also, @Jordan Vires  I think we are working on some assumptions, so the numbers can be skewed and at that price, based on the 50% rule, you are really right at the point where the deal does or doesn't make sense based on some items.

Are there any repair costs associated to the purchase or are all 26 units ready to go? Also, what percentage would you be putting down.  Knowing this we could calculate a safe number you probably could go in at, which would probably not be near 659k.  Also, I like Joel's mention that surrounds the low income housing, where headaches can be a problem.

More specific figures would help but I'd be weary.

Kyle

The 26 units are ready to go. This is an area in Kentucky, that is moderately rural. A "Nice" apartment that is new only rents for in the $600's. I probably would not go in at all if I had to force cash flow, so I calculating assuming going in at 659k or less (the offer would be less of course). Everything where I am in relatively low rent compared to the other areas BiggerPockets members are in. The building is in overall good shape. The location is right downtown on Square in the town.

Thanks

Originally posted by @Joel Owens:

436,000 at a 10 cap using 60% expenses when landlord pays water minus immediate capex needed.

So if inspection turned up 20,000 in repairs right now then 416,000.

I am basing off of 100% occupancy as you did not state it.

10,900 / 26 units = 419.23 a unit or 420. Very low income units with tons of headaches at that tenant base level.

Cap would have to be 12,13,14 for me to take that on. The cap you pay is a function of the area of the property, rent growth annually, the size of the property, and the tenant base among many others.

 I agree that is seems overpriced. The area in Ky where I am is limited to lower rents. What areas do you invest in and what price points for rent are in your target zone?

Thanks

Jordan