All Forum Posts by: Clara Lau

Great Thank you all for the great feedback and advice. In fact, the area itself has a lot of apartment blocks.

Sorry, John for the wrong spelling.

When I called the seller, he sent me an info sheet with too little information. I fired back an email with what may have been too many questions.

Since I do not have much insight to Detroit and no connections there, I went ahead to offer this to someone whom I know is buying and selling properties in the area.

I have received a reply that they were interested to check this out. In return I will probably ask to be kept informed so I can learn/have insight into how the property will be analyzed and negotiated.

Hi All,

Came across someone who is trying to sell this 32 unit apartment in Wyane County, Detroit, Michigan. His asking price is $320,000.

Now the seller is trying to offload property that he has just acquired. The reason he gave is that he is overcommitted.

Q1) What would the apartment be actually worth seeing that only 4 units of this apartment is currently leased. Is it still following the value = NOI/cap rate and how do I find the cap rate?

Q2) In the fact sheet given by the seller they listed the property as having a 17% ROI and the estimated rehab cost is $100,000 (this is from the seller's contractor).
This is his calculation:

Estimated Gross Income : $206,268

Estimated Total Expense : $107,515
Estimated Property Taxes: $ 16,536
Estimated Insurance : $ 8,004
Estimated Total Expense : $132,055

Net Annual Operating Income: $74,213

Purchase Price : $320,000
Plus Estimated Rehab Cost : $100,000
Total Cost : $420,000

ROI : $74,212 / $420,000 = 17.66%

Now I don't know how much was added for management, maintenance, vacancy and other operating cost

i) What would you do from here?
ii) How do you make this work out?

Regards
Clara

Thank you both for your replies !

Hello.

I have bought a single family rental last year and deed it under a LLC. I have a 50% private financing on it for 12%.

I am still building my credit rating. I would like to explore if I can partner with a friend who has good credit rating to get a conventional bank loan.

I can structure it for a 50-50 if she would put in some capital as well while I do all the management.

However, if she is not keen on investing in real estate but is willing to let me do loans using her credit, how can I structure this? What are the typical incentive that I can give her? What sort of risk is there besides wreaking her credit rating?

Thanks
Clara