Evaluate this listing...

[D S]

http://www.coldwellbanker.com/servlet/PropertyListing?action=detail&ComColdwellbankerDataProperty_id=12007203&page=property

I'm def just in the learning and research stage but I was curious if some more experienced folks might mind sharing the thoughts that run through their minds when they see a listing like this one?

Is 17 unoccupied units a major red flag or just this sign of a really really disinterested owner? Needs a rehab? Paint, carpet and mini-blinds or all new kitchens? What kind of cost ballpark woulf you put on a rehab on this many units?

The owner financing--likely means a bank wouldn't?

Anyone scared of the 5 year balloon on something like this?

Just trying to see if I am thinking along the right lines...

[Michael Rossi]

There is not enough information to analyze this deal. To even make a rudimentary analysis, you need the gross rents, purchase price, interest rate, and repairs needed. There's no point in talking about a potential deal without the numbers.

Good Luck,

Mike

[D S]

On one level you are right, there is no point talking about it--after all I'm not actually at deal-doing stage right now.

However, we are pretty close to having enough info.

The listing specifies the terms of the owner financing so we have a rate.
I believe it was 5% down, 8% interest amortized over 30 years with a 5 year balloon payment. $115k asking price.

It also specifies the size and number of the units and we know it is in Dayton and needs a rehab so I'd expect we could prob use the low end of the rent range for 2 beds, 1 beds and an efficiency in the Dayton area. 14 2-beds, 2 1-beds, 1 efficieny.

The two big unknowns I see are "why is it completely empty?" and "just how much of a rehab does it need?"

If anyone could speculate on typical reasons as to why a large number of units like this might go completely vacant that would be educational for me.

Also, in general, in your experience when someone says it "needs a rehab" are they talking about spending $500 or $5000 per unit?

And third, I'm assuming the owner financing is being offered since a bank wouldn't finance it. Why is that? Just because it is vacant? Or because its full of lead paint and asbestos? How often do properties like this become bank refinance-able with a little paint and carpet and some new tenants?

I recognize that almost all of my questions are asking you guys to speculate wildly but I'm just looking to check my thought processes as I look at potential investments down the road.

Thanks for your time!

Dan

[Michael Rossi]

Instead of guessing, why don't you call and find out? Then, instead of wild speculation, you'll at least have some preliminary answers. With less effort than posting on these forums, you could call and get the details.

As I look at that listing, it is not at all clear to me that they are offering the entire 17 units for $114,900. It looks to me like they may be offering 2-4 unit groupings starting at $114,900. At any rate, you need to KNOW the answer to all these questions. Then, we might have something to discuss.

However, even with the answers to these questions, you will need a LOT of money to be able to do this deal? Do you have the money for the rehab? Do you have the money for carrying costs? Do you have any experience with rehabbing or rentals? You can bet that when a listing says that the property needs a rehab, they aren't talking about carpet and paint!!!

Good Luck,

Mike

[D S]

Thanks for the reply Mike--some good points there.

[Jon Holdman]

I think the price shown may well be for a single unit. I often see listings flagged as "multi-family" when in fact its just a condo listing. Reading that one a couple of times makes me think that may be the case here.

Like Mike says, pick up the phone and call. When you see something that looks interesting, you should always just pick up the phone and start calling. This business runs on phone calls.

Jon