Is this a good deal or is this too good to be true? (Apt Complex)

[Danial Qureshi]

Questions:

-Is this in a warzone? 

-Does anyone know the Birmingham, Alabama area well enough or recommend a Commercial/Residential Agent that I could speak with?

-Could someone drive by the property to give me a better idea of what I should be looking out for?

-Based on the rent roll and the information I have at hand this property seems like it has been mismanaged for years, is there a specific way you would speak with these kind of landlords?

Full Property Address is:

1160 13th Street N Birmingham, AL 35204

Current Listing Price:

$185,000

Number of Units:

22 of which 8 are occupied

Current Day Rents at 08/22 Units = 36% Occupancy:

(196*08=$1565 per month / $18,780 a year)

Valuation at 36% Occupancy:

$84,000 - $92,500 ( I would offer this price today since this would be based on the current rents which are abysmal probably due to a landlord who doesn't know how to market and to rent out to the region $200 rents are way below market rates) (Analysis in excel sheet - link below)

Prospective Rents at 100% Occupancy:

(500*22=$11,000 per month / $132,000 a year)

(600*22=$13,200 per month / $158,400 a year)

Valuation at 100% Occupancy:

$1,215,000 - $1,225,000 (Analysis is in excel sheet link below)

Projected Repairs: 

I currently don't know since I don't have pictures of the interior, but I've factored about $75K ($3500 per unit) for repairs since I don't know the condition of the interior. (I realize this may be too low should I budget closer to $150K - how do I gauge this?)

Relative Rent Rates (Trulia) $500 - $600

Relative Rent Rates (Zillow) $500 - $800

Relative Rent Rates (Rentometer)

Commute Times to Local Areas Heat Map I was specifically looking at UAB

Restaurants and Amenities Nearby

Crime Maps

I've provided a link below for all of my analysis and the current rent roll:

https://drive.google.com/drive/folders/16GwJct6Atz...

[Blake Shultz]

Hey Daniel,

From the surface that does look like an attractive deal. I saw it pop up on the market and drove by it last week and discovered a few things. 

A big portion of the vacancy could very well be due to mismanageement (based on exterior appearance, broken down cars and windows, exterior trash etc.) but another huge factor that dramatically hurts the value of this property is the construction going on around it. 

The city is rebuilding the entire interchange of I-20 and I-65 right there. There will be a flyover that cuts across/over 12th Pl N (street backs up to this building), and it looks like an onramp on 13th St n (right around the corner). This increased traffic noise could potentially hurt your projected rent numbers and also increase turnover (once you fix the vacancy problems). As an investor (realtor and contractor) in Birmingham I would think your price per unit with only seeing the exterior would be at least twice your budget ($3,500 per) if not more. 

I hope this helps! Feel free to reach out to me if I can be of any additional assistance!