Vacant 8 Unit Property - Request Help Evaluating

2 Replies

Hi BP community,

I'm looking at an 8 unit property that has 7 out of 8 units physically vacant, though I have no idea if the lone tenant is paying. The listing agent is unresponsive and will not provide the financials I require to evaluate. Now, assuming 100% economic vacancy, how would I go about evaluating an income multifamily property that has no income? This is in a C class neighborhood. I cannot find any comparable properties with with to compare. It is actually in a single family zoned neighborhood. I talked to the town about this and they said this property was built before the zoning changes to single family, thus it was grandfathered.

The asking price is $415k, which I think is nuts for a vacant property. There are two buildings on the lot: 1, 6-unit building (all 1 bed apts) and a duplex (both units 2 beds each).

I would appreciate any and all feedback. 

Thanks!

Best regards,

Eric Waterman

Eric,

Do a pro forma based on either as is condition (if it's rentable) or as repaired.

If you do it as repaired then subtract the cost to cure. 

From there you should be able to derrive a price. You can check it against cap rates and per unit prices. 

Make sure that your pro forma is as accurate as possible to get the best numbers. 

Good luck! 

Jim 

@Eric Waterman

How is that market in Howell, NJ?

Are there any 1 and 2 bedrooms being rented out in any of the single families? Look at a few of the closest towns and see what an average rental price would be? After doing some more research then come up with a rental price that will be slightly lower than what you feel you would rent it for just to be conservative. You should be able to come up with a number for the rental income. From there look at average vacancies the same way and maybe call the utility companies and see if you can get an average of what was spent there in the last few years. If not, I've heard investors say to use an average of 40-50% for expenses. This is just my opinion, I haven't invested in a larger multi-unit yet. I have a 2 family and a couple of single family rentals. I've been looking at 6+, but am trying to narrow down a location. Good luck!

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