Contacting an Owner About Selling?

Question

A few of my friends are currently in the process of moving out of a 6 unit building in a great area. The owner/ landlord seems to be a bit of an absentee landlord 3 of the six units are currently vacant. He is also an older gentleman that could be facing some financial hardships from what I have been told. I want to know what everyone thinks is the best approach for contacting this owner and seeing if he would be interested in selling?

Justin Nagy · Answer

@Jaysen Medhurst  I have a decent grip on the numbers the unit is currently fully unoccupied. the top three units are three bedroom 2.5 baths  with two that were renting at 1200 a month and the third has been re finished but they were using it as an air bnb so it could probably rent for around 1400-1500. Underneath there are 3 one bedroom one bathroom units that were renting for 600 each. The two three bedroom units have potential to rent for about  1500 a month with a little bit of work. And all units are separately metered.

My biggest question is how do I approach the phone call aspect with the owner making sure not to offend him in any way to have it go as smoothly as possible?

Jaysen Medhurst · Answer

@Justin Nagy, an off-market deal, every investor's dream.

First, run your numbers and do your due diligence. What's the local cap rate? How much money would need to go into renovations/capital expenses?

Second, what opportunities are there to add value through sub-metering utilities, raising rents, etc.?

Third, what's your desired ROI. I suggest doing a deep dive to determine the Internal Rate of Return (IRR), which takes into account all potential profit as compared to other investments. There's a ton on BP about IRR.

Come up with some numbers and post them to the forums. There are plenty of other investors happy to poke holes and double check your math.

Good luck!