20 unit property, deal advice

6 Replies

Im going to be buying a 20 unit apartment property.

im doing seller financing with 15% down on a 395,000 price with a 6% interest  

monthly rent total is $8,215 when fully occupied, 17/20 are rented

monthly expenses:


landscaping- 200



future property management -600-700

seller payment- 2400

total is 2500-3500 (set aside 25% for repairs and vacancy of that. total) 

cash flow around 1800-2600

the property is real low maintenance, no washer/dryers, building is cinder blocks with concrete flooring, 

there is more story to the property but this is just a rough snap shot of it. 

good deal or no deal? thank you

Wow! That looks like a killer deal! Your numbers look pretty good. I would only make one suggestion. Consider being a little more conservative on the cap ex/maintenance. Give yourself a 30% buffer instead of 25%. If you make around $2k a month cash flow then you should be getting about a 40% return! That’s outstanding on 15% investment or $59,250 down. Great find!

Can I ask what city your buying in and what type of an area it’s in? That might be a big problem. The seller might be selling you a great deal on paper but could be in the ghetto. I have dealt with section 8 and it’s not the end of the world. It’s actually kind of nice but a little annoying dealing with the make ready after the tenants leave. It pretty much takes a majority of my cash flow for the year when they move out because sometimes things are broken or stolen. That’s why I say give yourself a little more of a cushion. Let me know bro!

numbers seem weird. $70 a month insurance on a 20 unit? the price is under $20k per door? need cap ex costs. Is this in a war zone or in a different country?
No it's not in a war zone it's on the east coast, no section 8 just a lower income area not in a real bad neighborhood. still looking into some of the numbers but that's what's on the lease summary page. it needs a little TLC. im flying out to see it next week. It's a real cash cow for the current seller he has no property management or loan payment. thank you for the tips. Semper Invest

@AJ Angel - I'll have to agree with @Paul Choi that $70 per month is extremely low for insurance. I suggest calling around and getting some quotes, as I would expect closer to $200 per month (or more, depending on the location and condition of the property).

I would also be interested in the taxes, as $230 per month also seems low.

What about Sewer / Refuse?

With seller-financing, what will the amortization look like? Will there be a balloon payment that would require you to come up with the full payment within 5 years or something similar to that?

Lastly: 25% for repairs, vacancy, etc: please take another look at these numbers. I would set aside 10% for maintenance and 10% for CapEx - that leaves you with 5% for vacancy, but you're already 15% vacant at time of purchase. Why are the units vacant? What is the average vacancy from the previous owner over the last 5 years? Are any of the tenants on lease, and will you be keeping them?

Some things to think about, but this looks like it could still be a great deal.

@AJ Angel

Hi Aj

Like the seller financing. Possible RUBS play with water.  Insurance is low, usually around 200-250 per doors.  If there is no laundry, any place to add a couple of machines for additional revenue.

What is unit mix?

Good luck


im looking more into the taxes, insurance, trash and sewage. The tenants are on a month to month lease. a lot of them already told the seller and agent they are staying put. they like the area and its affordable. i will keep the tenants and have the new property management work up a lease/contract for them. 

there is no amortization own the financing side that i know of.  no there isnt. after 3yrs of financial records /history and experience as a owner i will then get a loan on the property to pay the seller off. he will hold it for 3yrs.    

What is unit mix? 13- 1bd 1ba and 7- 2bd 1ba 

Thank you so much for the help guys. the questions and details provide are priceless. Im fairly new at this and still learning and growing.


Create Lasting Wealth Through Real Estate

Join the millions of people achieving financial freedom through the power of real estate investing

Start here