Purchasing a large multi-family building

2 Replies

Hey guys,

Had a question for the community. Looking at purchasing a 64 unit property.  Asking price of $2,125,000.00. There are eight all brick buildings in total with eight two bedroom apartments in each building. It is 100% occupied currently, and gross rents are $342,180 annually. Rents are currently scattered between $425 and $525 per month. Proforma of increasing all rents to $475 would show gross income of $364,800

Income:

Gross Rents - $342,180

Vacancy (5%) -    -$17,109

Laundry - $7,246

Total Income - $332,317

Expenses:

Taxes - $37,482

Insurance - $11,906

Gas  - $1,250

Water - $42,983

Electric - $2,492

Trash - $2,192

Maintenance and Supplies - $33,302

Lawn and Snow - $4,855

Cleaning - $1,688

Misc. - $1,735

Professional Fees - $2,191

Total Expenses - $142,076

Net Operating Income - $190,241

This shows a 9% cap rate.

Had a few questions. 

First, of course, what is your opinion of the deal?

Second, what is the normal due diligence period?

Third, is it normal to only be allowed to see a few units and relatively no information until getting an accepted offer?

As I was speaking with the agent I had many questions, and was repeatedly told once we had an accepted offer all my questions would be answered, leases would be provided, we could look at as many apartments as we wanted, etc. Just curious if this is the normal method in purchasing a larger unit. I have purchased smaller 12 unit properties in the past, but nothing this large.

Thanks for the advice in advance!

Quick question - what are your property management expenses? I see 2k for professional services but nothing else, unless I'm suffering from temporary blindness.