56 Town home units, hot to structure the financials

[Hunter Sawitzke]

Looking for some experienced large multi family investors to point me in the right direction.

I recently came across an off market Town home complex that has aged owners. After talking with the manager(one of the owners) he quickly lead towards to idea of selling the complex. “If the right deal is offered to us.”

The owners owe nothing on the complex and all four owners are 62+ years old

Here are some of the numbers.

There is 14 buildings. All of them are 4 plexs for a total of 56 units

All units are 2 bed 2.5bath, tri level ( 2nd story, main floor, 3/4 finished basement)

Ranging from 1500 sqft to 2000 sqft

Most units renting at $950-$1000 a month.

The units were built between 1980-2000

Some of the units could use slight updating( kitchen and bath mainly)

In my market, this rent per sqft is very low. These are big units and the price is below market rents.

The owner told me that he knows it could be managed better and he knows that the rents are under market rents.

Rent roll is roughly $53k each month.

Expenses are totaling around $26k

Making the NOI $28k a month or $336,000 a year

The cap rate for this area seams to be around 7%

Cash flow after debt service would be around $14,000 a month

Making this complex worth roughly $4.8M

Now, I feel that the numbers work well and it’s sounds like the owner would seriously consider selling for around this price.

Is this price a good deal?

How do I structure this purchase. I have connections with a couple private lenders and hard money lenders but I don’t think that they would be willing to swing this large of a deal.

If I were to purchase this deal, I would personally run and manage it myself. (Legs on the ground)

JV partnership is also an option.

Any information or advice would be greatly appreciated!