Please give me feedback on my latest deal

[Pat Hansel]

I signed a contract to purchase a 38 unit apartment complex in Somerset Ky. today. This complex sits directly across the street from a 6 acre tract of land that I am currently building 38 apartment units on. This same 6 acre tract has an existing home on it which my wife and I plan to renovate and move into. The units across the street are in need of a facelift but are in solid condition. It is out of character for me to take on 2 projects of this size at the same time but I really wanted to clean up the street due to the size of my investment on the streeet and the fact I will be looking at this property from my front yard for the foreseeable future. Here are the numbers on the deal. Please tell me what you think:

Purchase Price: $650,000

Renovation costs $400,000

Units consist of:

27 1-Bedroom Units @ $450/month

11 2-Bedroom Units @ $550/month

Total rents = $18,200/month less 15% for vacancy/repairs = $15,470/month

20 year amortization @ 4.0% interest locked for 3 years. Payment = $5772/month

Down payment = 15% of purchase price: $97,500

I will pay water/sewer/trash @ $1500/month

Insurance @ $1520/month

Property Taxes @ $600/month

I look forward to your critiques of this deal.

Pat Hansel

Managing Member, Hansel Properties LLC