All Forum Posts by: Christopher Munn

BP Community,

I recently came across a deal in Ohio for over 100 units and need some help on it. 

The property is 50% occupied and currently doing about 80k in NOI (Seriously Underperforming). Cap rates in the area can range from 7-9% on average. The property was listed at $3.5M but was just reduced to $3M. I thought this was outrageous but I contacted the broker. The broker said that the owner received over 5 offers including a $2.5M cash offer (that was refused). My numbers say all day that this property is worth less than $1.2M as performing. If performing around 95% occupancy, the property should do about $300k in NOI.

Could anyone help me understand the $2.5M cash offer? 

I know there's a ton of upside on this thing but I obviously shouldn't be paying for value that I will in turn have to create.

I've analyzed a good number of deals and am just baffled by this one. 

Thanks for reading my long post and hope someone can help me make sense of this.

@Gino BarbaroWe tried with the letter of intent, but the seller was super opposed to it. (I think the agent was really the one opposed).  Thanks for the advice about the mortgage contingency and the extension.

Thanks @Jake Thomaswill be asking for tax statements.

I think I know the answer to this question but I would like to verify it with the BP community. A partner and I are very close to closing our first multifamily and first REI. It's a small 6 unit that we see value in based on the economics we have run. We got the purchase agreement this morning from the agent which has some contingencies around due diligence and financing etc. We have gotten spreadsheets with 'rent rolls' and 'expenses' in the past but haven't seen any legit documents (bills, bank statements, etc) to confirm all this. Is all this usually provided in the due diligence period by the seller? Or have you all experienced situations where you received all this info before signing a PA?

Thanks