Buying holdings from a private equity firm.

[Geoff S.]

I have been fortunate to connect with a private equity firm this past week. This group buys under performing and non performing debt across the country. After taking procession of a portfolio of assets, they secure the properties, make necessary cap improvements and then resell.

The portfolio being offered consists of 35 units in seven buildings. They have replaced roofs, made energy efficiency updates in the basements and even done substantial rehab work within some of the units. Most of the buildings have 100% occupancy with tenants filed from a respectable PM firm that have been managing the properties. The PM services are available after purchase. I believe leases are all mostly month to month while the existing owner has been holding. The equity firm is also offering very attractive financing.

For those BPer's whom have dealt with purchases from this type of seller, what insights can you provide. Am I missing something? I'm doing normal DD and have yet to find a reason why this isn't a deal to jump on. Numbers are all coming in far better than any comps I've been looking at on the market (12%-14% CR and $120- $150 CF/mo/unit. I can buy as many/few of the buildings being offered.

I am meeting with a rep from the firm tomorrow to inspect the properties and will report what I discover. I would love to hear from some of you savvy BPer's as to what questions you would be asking this guy when I meet him tomorrow. Any comments/advice would be appeciated.