All Forum Posts by: Carey Green

Good points everyone. @Immanuel Sibero - he's selling cause he's old (in his mid 80s and still working). His realtor (my buddy) said that he suggested him selling them one at a time and he said, "I'm old. I'm done. Just sell them all together and be done with it."

I'm totally with you on the "losing money" piece - in both scenarios you pose. I'm not up for that at all, so I'm walking carefully. With the way he's got it priced I may decide to walk away just because I'm not sure I have the experience to pull this one off. I know I could learn - but I'd hate to learn the hard way by losing big.

I don't think I'm being timid or afraid in a bad way, just trying to be clear on my limits this early in my career as an investor. I'm not opposed to a challenge, just opposed to doing it wrong and making others pay for my education. :)

Yep, now to pull together that cash deal @Bill F. :)

Thanks for your generous help and input!

Thank you @Andrew Johnson

I'm fairly new to this so some of what you said is still a bit over my head, but I think I get the gist of it.

@Bill F. - it's possible the seller would knock it down by 5% or more if we had all cash. The way the game is being played in the area right now in all real estate is that sellers put stupid-high prices on their properties to see if they sell. If not, they back off little at a time to find the right price point. I guess that's not so unusual, it's just that it's "stupid" high in this area.

Equity partners, @Bill F.  And I think they'd sell within the next 12 to 24 months, easy. There's just nothing in that price range available in the area.

@Bill F. that's a great idea for my realtor buddy to get involved - I'll ask him about it!

As rentals, the returns are not so impressive. The vacancy rate is 1% (seriously) and the monthly rent is $900 each. 32 units. I think there is room for an increase in rents and some things that could be done for value adds to justify it, BUT - at $4.4M it's hard to sell the additional investment for value adds (at least that's how I see it).

Hi @Bill F. - I like the visuals too. Thanks for that. No, believe it or not the asking price is $4.4M. In the area where this is, it's CRAZY right now because there is absolutely NO rental inventory and single family prices are going through the roof. In the $150K to $250K range there's hardly anything available.

My realtor buddy is saying it would be a great deal to buy it at that price and sell the condos individually, which I'm considering if I can get the investors together. Other condos in town, in less desirable locations, are selling for $165K each - so with 32 of these selling at that price we'd be looking at $5,280,000. 

So @Wayne Brooks , you're saying I should include it back into the income and pretend it wasn't listed as an expense?

That makes sense @Bill F. - thank you. This deal is a sale of the property - no stock purchase involved. The owner has made the apartments into condominiums but he owns all of them and rents them out. I can't imagine the annual profits are as low as they have listed, that's when I noticed the 92K in depreciation.

So if I'm hearing you correctly - the way they've listed it in the P&L, it should be included in the income to make my assessment. Right?

The owner of the property is an accountant so I doubt he's ignorant about what he's doing. And I doubt he's hiding expenses. He has a good reputation in the town.

So - am I hearing correctly that the net expenses included on the P&L, which DO include the $92K in depreciation expenses, should be taken at face value. If that's the case it comes out with a cap rate of less than 1 % - which doesn't seem right to me.

I'm looking at the P&L for an apartment complex I'm considering as an opportunity to bring private money investors into - however, this is my first time doing a deal this size and I'm curious what I should do in my assessment to account for the depreciation expense shown on the P&L.

It's showing under "Other Expenses > Depreciation Expense" at $92,580.00

Should that be considered part of the NOI or not? If so, all of it, or just a fraction?

Or is there another way to account for it?

Thanks!