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So I'm finding some good prospective properties.

I was even able to find some potential partners.

Now with the market the way it is, what is the best way to go?

My ultimate goal is to acquire some apartment buildings.

My thinking was to find some fixers and sell them below market as rentals or retail in order to build up some reserves.

Then buy some small appts. like 4 unit or more and expand from there.

What would be the best strategy now?

I'm in Michigan and I focus mostly on blue collar suburbs in entry level type houses.

Ok

I looked at the property again.
This time with a contractor( who thinks I'm going to have him do the work).

He pointed out the house needs the following repairs:

Carpet, Paint, Siding and all windows. I will also throw in landscaping for top curb appeal.

(I may also convert 1 room next to the kitchen to a first floor laundry room, depending on the plumbing & Electrical costs.)

His price is 23K for doing the whole thing.

Landscaping & Painting I will do myself.

My brother who remodels RV's will help me with the contracting.

Since this is my first deal I will do the contracting myself. Buy all the materials and hire experienced people to do the work.

A house just sold in the same street without a basement for $119K in as-is condition. another fixer!

The house I'm buying looks a lot worse than it really is due to tore up carpeting, ugly outdated siding, ugly outdated windows and a lot of junk inside.

Instead of HML I'm going with a credit partner.

After rehab I will either sell it or lease it. Leases in this neighborhood go for $1200/MO.

I'm nervous and exited at the same time.

Thank you. Very good info.

So just to be clear, the 14 - 18% HML costs includ ethe holding cost right?

as in paying for the loan until refi or until sold?

Thanks for the reply.

Your estimates seem to make sense.

Yes exterior will be all new siding.

The comps you can assume 100K

I'm thinking of offering $50K? $40K?

This is a REO

Repair will come from Hard Money draws.

Ok here is the deal,

1200 sq Ft. Frame house with (finished) basement

Property comps $100K - $140K

Asking price 60K

Financing: Hard Money

Needs: Carpet, outside siding, paint, Kitchen cabinets, and windows.

Painting is done by me.

Three questions:

1. What are the costs of a hard money loan for 12 months?

2. How much should I figure for repairs?

3. Can I refinance as soon as repairs are done?

I have a few questions:

in an area where home prices comp at 100K

I see REO's for 70K asking price.

1. How can I find out what the local wholesale price should be for properties?

2. Is there an online resource for figuring rehab costs i.e. : kitchen cabinetry, bathroom, landscaping, roofing.

Not that I would do all on one property, nut just so I know with what price to go in based on repairs needed?

3. What is the average cost on a HML of 70K points, percentage etc.

Income & Expense 25
Proforma Budget Units
Income:
( average rent is $580)
Gross Potential: $ 175,440
Vacancy & Bad Debt: 7% (12,281) Monthly(actual 92% rented)
Adjusted Gross: 163,159 $13,597
Other, Misc. & Laundry Inc.: 3,000
Gross Operating Income: $ 166,159

Expenses:
Administrative: Expenses Per unit % of Exp
Management Fee 4% $ 6,646 $ 266 9.15%

Maintenance:
Trash, Lawn & Snow $ 1,000 $ 40 1.38%
Repair & Maintenance $ 10,000 $ 400 13.77%

Utilities:
Electric, Gas, Water $ 14,000 $ 560 19.27%

Fixed:
Insurance $ 6,000 $ 240 8.26%
Replacement For Reserve $200 $ 5,000 $ 200 6.88%
Tax (Real Estate) $ 30,000 $ 1,200 41.30%
Total Operating Expense: ($72,646) ($2,906)
Net Operating Income: $ 93,513

The asking price is $1Mil (seller financing)

What should be my max offer or terms?

p.S.

The upgrades that could help future value are:

1. seperate utils

2. energy efficient windows

3. exterior new siding

4. spruced up landscaping

WOW

I did not realize I was su7ch a trouble maker :groovy:

So If I find a property with a cap rate of say 10, I can still get burned on the deal?

I'm asking becuase I just posted a analasys of a property that I may be able to get very close to a cap rate of 10

BTW I also saw a property with a cap rate of 20!!!!

In a war zone. Scary :chicken:

25 unit Apt Bldg

Asking $1Mil

Cap Rate: (Potential) 8.50%
Price paying (Per Sq. Ft.): $ 60.77
Price per unit $ 4 4,000.00
Gross Rent Multiplier 6.62
Expenses per unit $ (2,906)
Expense to Income ratio 43.72%
Income per unit (Monthly) $ 553.86
Average Sq. Ft. (Per Unit) 724.00
Debt Service Coverage 1.37
Cash Flow (BT) $ 2 5,441.51
ROI YR.1 (BT) 11.56%

Also included is 1 house that is rented. worth 100K

Currently 92% rented
Renters pay no utils

Seller is motivated
Seller will finance @ 6%
Seller wants 100K down

Questions:

1. Is this a good deal?

2. I do not have 100K. How can I structure this deal to make it a win win?

I was thinking deferred down?

Any other ideas? Suggestions?

Hi Kelvin,

Thank you for the insights!

What about if I do not have any experience yet with Apt. buildings but can find the money for down, can I still get it financed??