How to walk thru this deal

Question

I have an opportunity to buy 10 houses around a college due to owner wanting to retire due to age and working on some charity programs that he and his wife have started.  He has a partner in the sense that they split the costs of staff(office and maintaince staff), properties are well maintained and cash flow.  He is going to be sending me all the financials on the props.  I have some properties already 3 SFR and one 6 unit apt building.  I have never tried to take on this many at one time  and not really sure what kinda questions to ask, is there anything different to look for?  I will add more info once I get the financials. Just wanted to get the ball rolling.

Account Closed · Answer

Nick you need a sales price to compute a cap rate.  And even if you just used asking price it would be of no use.

Account Closed · Answer

You are correct Bob, I figured that was a given haha my bad.

Account Closed · Answer

What are the cap rate individually and what is the portfolio cap rate as a whole?

What is the condition of the units?

What is the asking price vs the appraised value?

Is there management cost?

Monthly final profit?

Rent Roll - how long has the tenant been there?

Robert Wade · Answer

Sorry it took so long to get back to this.  Got all the financial info from the seller and decided not to pursue.  The properties were all old and were close to having some major expenses needed.  Thank you for giving me feedback.

Robert Wade · Answer

Planning on buying both.  Ok, want to make sure on same page here.  Rent rolls is monies coming in on monthly basis.  How is market rents defined that it is different from rent roll unless it encompasses vacancies and amount of the rent for the unit.  Sorry don't mean to be stupid here, but just making sure my terminology is correct and I understand.   My wife and I have been kinda on our own doing this and learning as we go.  I have a full time job and help my wife run one of her two businesses.  I am trying to learn more about real estate and get more into it so I can quit my job before they let me go. (Pharmaceutical sales)  I've been at it for 17 years.  I will get back on here Sunday night or Monday.  I'm leaving at 4am to go out of  town till Sunday evening to fish a bass tournament at Kentucky lake.

Account Closed · Answer

Are you buying his real estate business or the real estate?  His rent rolls and his taxes will be of less importance to you than market rents and the expenses you will incur.

Robert Wade · Answer

Sorry, his financials showing rent rolls and tax info on the props, and cost of staff. He is going to give me the info in a spread sheet.

Account Closed · Answer

What financials do you need?  You should know market rents, expenses, values etc.

Then all you need is maintenance schedule of roofs, HVAC, etc. and all that would be confirmed thru inspections.

Robert Wade · Answer

Thank you Gentlemen,  I still have not gotten the Financials yet.   There is a staff in place that does bookkeeping, renting, maintenance, etc.  The cost of that is split between him and his partner.  They both own their own houses both utilize the staff for boths properties and split the cost evenly.  He says that I wouldn't have to do anything if I didn't want to and just get the checks.  (0 figures as of yet).  That is not the type of owner my wife and I are though.  We like to be involved with our investments.