All Forum Posts by: Tab Teehee

Henri,

Just wanted to share the numbers we’re working with...

Payroll $1266

Admin $117

Management $1200

Trash $150

Taxes $359

Insurance $450

Maintenance $850

Lawn/pest $400

Marketing/retention $75

For a monthly total of $4867

Do these number seem realistic to

You? The property is in Oklahoma which is probably less expensive O/M costs than Florida. 

Hey Joel, thanks for the interesting idea...but at the sake of appearing clueless, what’s “value play” ?

Actual expected rents are $699 for the 1 bed and $799 for the 2’s, with an increase the second year. 

I feel the pro forma is fairly heavy with expenses, which I’m sure is better than underestimating. The rental market in the area is very tight and these units should fill as quickly as rehabbed. 

I just hate the thought of sinking so much money into the infrastructure, when it does nothing to improve the NOI! I guess that's simply the nature of the business when you're dealing with a 40+ year old property. I guess on a positive note, the property sits on 8+ acres and the buildings probably only occupy 2 acres, so there is potential to build additional units or sell off extra land.

So is any deal that makes money a good deal or is there a magic number everyone is looking for?

Mike, 

The Pro-forma prepared by my manager shows second year NOI at $128,500

This is kind of a follow up to a previous post regarding this property. 

20 unit property...twelve 2/1’s and eight 1/1’s. Property is currently owned by my family’s estate and we have it under contract to purchase for $375k. 

Taking the advice of many here on BP, our first order of business was to secure a great property management team, which I’m confident we’ve done. Second order of business, see what rehab needs to be done to command the most rents for the market. 

I felt that we had a fairly solid rehab budget, and we’re close to approaching the bank for the financing, when things started to go south!

One of my proposed  electrical contractors found numerous code violations....costly code violations! 

We had planned to upgrade all 20 service panels and relocate them to a wall, outside of the closet they’re currently installed in. The electrician is worried about some of the wiring to appliances being aluminum, he’s also concerned about the lack of a disconnect between the meter and the service panels. 

We feel that we could be approaching and possibly exceeding 20k per unit rehab cost, so my 375k deal will wind up being 775k!!!!  I know that’s still only $38,750 per unit after rehab, but it really changes the appearance of this investment. We’d really hoped we could max out at 10-15k per unit, but I guess that just can’t happen. 

I really need advice, pep talk, something, lol!

Possibly need a new thread for this but it still definitely applies to this original question....

I reached out to my prospective property manager about how stressed I was trying to get the numbers right on my project.  She definitely feels like I have more than enough room to add the improvemts I’m hoping for, based on recent comparable sales. She feels she can get my project completed at $10k per unit, and is asking if I’d like her to coordinate everything through her contractors and suppliers....for a nominal fee. I believe the nominal works out to be about 5% of the overall cost, or $10k.   

Is this a typical scenario in this industry? This manager is highly regarded in her success repositioning properties such as mine. I will say I like the idea of handing all of the decisions over to someone else, lol.

Ok, that makes sense. This is definitely a buy and hold situation.

certainly Jill, glad you asked. There are 12 two bedroom units at 774 square feet and 8 one bedrooms at 661 square feet, for a total of 14,578.

Henri, 

I’ll give a bit of history here...

These apartments were built by my Father-in-law back in 1972. My wife and I are taking on this project for both its investment potential as well as sentimental value.

I’ve found an awesome management company that has prepared a 2 year pro-forma for us. With the projections to have us cash flowing in about 5 months. 

As far as the roofs go, they are 30 architectural shingles about 10 years old, but are installed over another layer. 

You could probably rent many of the units as/is or with little improvement for $200 to $300 less than competing properties.

Percy,

The AC units are from 1972 and are in various stages of deglect. The kitchen cabinets are made of particle board and a wood grain film that is peeling off...although you could paint them for the short term, it would be temporary. I toured some other competing properties, one that is managed by the company I’m interested in hiring, and have a good idea of the quality of remodel I’m looking for. The other properties lucked out since there older plywood cabinets were still usable with new hardware and the countertops had been epoxy coated and looked acceptable. I feel I’m stuck paying the price to revive these 46 year old apartments due to lack of any improvements over the years.