New Apartment Deal

[Dylan Mullins]

Hi All, Contemplating making an offer on a new 170-unit apartment building. Below are the vitals, would appreciate any thoughts.

Purchase Price: $2,350,000+/-

Units: 170 (All 1000 SF 1/2/3 BR)

Current Monthly Rent: $76,500/mo 

Annual Rent: $918,000 

Vacancy: 33%

Effective Gross Income: $605,880

Taxes: $21,000

Insurance: $15,000

Management: 5% (will be partially self managed) $30000

Utilities: $6,000 (only common area electric and electric heat, all other separately metered)

Repairs/Maint.: $50000 (I own a construction company)

Marketing/Promotion: $1,500

Trash: $3,000

Supplies: $5,000

Water Testing: $3,000

Misc: $1,000

Total Expenses: $145,000

NOI: $460,880

Cap Rate: ~18%

Property is in overall good condition but could use some upgrading. Pending inspection there appears to be little to no immediate deferred maintenance. The area is decent, but most likely not going to experience significant growth. This would be a long term hold for cash flow and would be a stepping stone from smaller multi's.