Multi family apartments vs. brand new town house development?

Question

Guys, thoughts on a 8 cap of 23 units (130k a door) on brand new town house development, roughly 9 months old. There are a total of 64 going up and under construction. Forget the details of the cash flow, my question to the experienced guys is if I want apartment multi family and a nice deal of town homes comes along is there any concerns you may have with town homes? I realize there are benefits to both and selling the apartment would be based on NOI vs. market comps. I just want to make sure I'm not getting off track from my focus of apartments. Thoughts? Asking 3.2 mil for 23 homes.

Louie Herron · Answer

thank you! My focus has been apartments but his deal has some positives, but dont want to get off track but not mis a good cash flowing deal.

Jeff Greenberg · Answer

You didn't mention how many total TH there will be.  My concern, as it would be with condos, is not having a majority control over the HOA.  Does anyone else own a major number of units in the development? Some HOA's are run by power hungry non professionals and can ruin your business model.  Within HOA's there is usually a limit as to the number of non owner occupied units are allowed.  Your lender may also have rules on this.  Then they is the lenders policy on the release of funds at the sale.  The individual sale funds my go to loan paydown and not to where you wanted them to go.

Just a few things to think about