How much would you bid for this Distressed Multifamily Deal

[Joshua Burke]

So our company is considering a move on this deal in Chicago. It's 12 condos within a 14 unit building. There is no HOA in place. 11 of the 12 are rented - $1700 on average. It's is a very good and improving location next to a large, safe park - amazing skyline views. Very good quality construction.

Because of these are 12 condos, not 1 apartment building, I anticipate traditional financing to be tough. IL state law would allow the new owner to buy the other two units at market price and force them out. This is a heavy-handed option, but it exists.

I see two plays for this deal:

1 - Sell off each unit as condos asap (buy out the tenants)

2 - Hold for 4-7 years for CF and sell as condos or deconvert the building to save on taxes.

Estimating 40% in expenses, and a cap rate of 7%, I calculate a current value of just over $2M.

What would you Bid on this blind auction, how did you come to that number?