What would you offer this property..

Question

What would you guys offer for this property and do you think i missed anything in my calculations.  Probably should count in another 8% in CapEx. Property is in a c- minus area.  6 units all 2 bedrooms, Farily new roof/boiler,, etc and not much rehab needed. this is mostly a turn key property. One owner since the 70's.

Ben Leybovich · Answer

I hate boilers. And I hate paying for heat. but, more importantly, the vintage is what it is - what's the exit?

Scott Distel · Answer

Hi Bill,

Would you please tell me what PHA stands for?

Thanks

Bill Gulley · Answer

Reality, it will be a hard sell to have tenants in a C- area paying the existing rent with gas bills on top of that, they aren't that stupid, you'll need to reduce rents to reflect utilities to the competition of comparable rentals. Do you take Section 8? Check with your local PHA as to rent levels for the area. :)

John Teachout · Answer

Is 5% vacancy realistic in that area? Can you float the property if it's not?

You should plug in the garbage costs. It shouldn't be difficult to come up with a number.

On the heating data, was that an average over several years or just last year? A really cold winter could really impact those numbers negatively.

Mike D'Arrigo · Answer

@Kay Ferdous Paying for gas heating would be a deal breaker for me. Tenants have a habit of cranking up the heat and running up huge heating bills that you have no control over.

Kay Ferdous · Answer

option of converting to gas is there in the area.. Not sure what that might cost. Maybe that's a value added ?

Roy N. · Answer

@Kay Ferdous

One more suggestion:  In your analysis of the property to see if it meets the grade, do not count ancillary income (especially laundry).   See of the property can perform based upon its rents alone.

Kay Ferdous · Answer

plumbing is still original- as of now before inspection no major issues.

Electricals are breakers

I'm about to make an offer for 240k.. and see where it goes from there.

Roy N. · Answer

@Kay Ferdous

With that vintage of building, your wiring should still be copper, but could be aluminium - your building inspection would confirm.   Despite the "common hearsay" aluminium wiring can be safe, provided the correct receptacles/fixtures are used, or the ends of runs were properly pigtailed to copper.

You definitely want breakers over fuses and you would want to confirm the existing circuits have the capacity to handle today's electrical loads and that there is additional room in each unit's panel.

What would you offer this property..

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