Sorry made an error in the 960K. I meant 96K. Owner is asking 31K under an appraised value that was done in May 2014. He is telling me that it was appraised conservatively and that the appraiser should have used comps from other props. Normal seller type stuff. New appraisal is the new value as far as I know.
He seems to be low on his expenses. $200/mo for for electric service for 19 units? WOW! How does he manage that? It has to be 5 times his stated amount.
He has his oil heat expense at $1,250.00 per month. He says that he shuts the furnace off in the end of March when it gets below 50 degrees. He uses 5 months @ $1,250/Mo for calculations. I don't believe this either. I would use a Sept 15th thru April 15th to be safe. I know it varies, but this is a good scenario on heat usage time.
Yes, I have EMD money and some for an attorney, but I don't think I am going to need it now, because I am leery of this seller and his expenses. I would never use his expenses.
I was thinking that maybe I could live in it and maintain it for me and a partner, but I would need a partner to put up over half the cash. This would require me to sell my own property as well, which I have been contemplating for the last month or so. I though maybe an Equity Participation offer might work.
End result. Owner is trying to make the expenses look very low, and I know that they are too low. I could not flip this, because it is nowhere near the 70% rule, and no repair figures are known. He is also giving me examples of other properties and telling me what they are getting and how his deal should be similar. If it cash flows great. How much work is needed? Who knows. All he has said is that the 1 vacant unit he has, is vacant, because it needs work.
There is one commercial store unit that is vacant and could supply an additional $9,600/yr gross income.
Owner seems to believe that he may not be able to verify vacancy rate by documentation, therefore, this would need to be supplied by a realtor or another Investor of a similar size property.
Annual Income $103,500
Annual Expenses: $46,200 I know these are low. A few thigs are left out of here.
He claims the current NOI is $57,300
There is $12,600 in annual losses due to 2 vacant units. So the potential NOI if his expenses were accurate could be $69,900/yr
He first claimed that it was $8K per month or 96K/Yr, but has since backed off and I have not questioned him on it.
He wants all cash for 236K and he wants the new buyer to pay his overdue taxes off, which are 33K.. So his asking price is 269K. 31K under a one month old appraisal.
Who is this deal good for? Possibly a buy and hold Investor.
Have not heard how much in security deposits he is holding? Waiting on that.
A new owner could use $8,625.00 plus any security deposits to put down as a deposit, if the property could be closed on July 1st. If he has security deposits and they are the same as the rents, then this figure could be $17,250.00 or 5.75% to go towards the purchase price.
