Newbie First Deal Need Help

5 Replies

Three story apartment complex, Built: 1970

Number of Units: 29

Gross SF: 23,184 SF

Average SF: 653 SF

Net Leasable SF: 18,989 SF

Roof: Slight pitch asphalt shingle

HVAC: Forced hot air, gas furnace/central AC

Neighborhood Class B 

Properties Class B-

Rental Unit Income $212,911

Vacancy $17,609

Effective Gross Income $195,302

Laundry $2,199

Garage $960

Other Income $4,192

RUBS Bill Back $2,379

Total Other Income $9,730

Gross Operating Income $205,031

OPERATING EXPENSES

Advertising/Concessions $6,115

Cable $8,344

Management $10,252 (should be $21,291 for 10%)

Office Supplies $239

Employee Benefits $0

Legal/Credit Reports $1,078

Landscaping/Snow Removal $3,730

Cleaning/Maintenance $1,956

Repairs/Supplies/Maintenance $19,073 (should be $21,291 for 10%)

RUBS Utilities (Water,Trash, Pest) $18,451

House Gas/Electric $1,944

Real Estate Taxes $21,276 (should be $36,000)

Insurance $4,400 (should be $8,400)

TOTAL EXPENSES $92,192 (should be $125,109)

NOI $205,031 - $125,109 = $79,922

$79,922/0.08 (cap rate) = $999025

I did change some number for management, insurance, repair and maintenance. Any advice would be helpful.

Do Ratio Utility Billing System risky for new owner?

Listing Price 1.4M

1M is a good deal???

How about 1.1M???

Thanks

Long Khang

This is your first deal?

You're nuts!

@Long Khang  

We like to see CAP 8%+, Cash on cash 12%+ and Debt coverage ration 1.6%+

Paul

Joseph

yes i just know about how to calculate value base on the NOI/Cap Rate. Any suggestion maybe i should not deal with more than 10 units??

Thanks

Long Khang

Paul,

I did not calculate the debt ratio, but 1.0M is 8% and CoC is 12%-13%.

So if more than 1.0M is not a good deal??

I looked at couple deal and really nervous about the rent roll with most tenants lease expire. 

Is it a red flag if the owner didn't sign lease with tenants?

Can you trust the properties management company?

I also nervous about commercial loan, i have to refinance 5 years later. 

what if the interest rate going up and the property value going down??

What if i the bank not qualify for me to refinance?

How much money should i preserve for emergency?

Thanks

Long Khang

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