Analyzing an off market Mulit-Family BURRR with NDA

[Bradley Walker]

So I have found a multi-family property in Southwest Ohio that is in a fantastic location and is a complete gut. In fact, the building is condemned. The owner has had the building for 30+ years and knows the value of the location and wants top dollar for what is essentially a shell. Admittedly I really want to do this project, but I know it needs to be a good business decision. I need to sharpen my pencil and determine real rehab costs to determine a final ARV and essentially figure out a realistic purchase price.

Property Description:

- 4 Level Apartment Building built in 1900 or thereabouts

- The building is vacant and has been vandalized so it will remain that way until someone rehabs the building. 

- 10000 sq. ft. total, or 2500 per level.

- Load bearing masonry (brick) with wood framing with a stone foundation

-10 ft. ceilings, plaster and lath

- It will need all new plumbing, mechanical, HVAC, etc... a full rehab. 

- I am thinking of 8 total units, 2 per floor. 

My topics for discussion:

I don't want to let people know which property it is because it's a hot area and people could potentially slide in and steal the deal (it is an off-market deal). I spoke to a demo contractor and they estimated that demolition of the interior could be anywhere from $60k-$100k and could be as much as $200k if there are environmental issues (Asbestos) which there assuredly are. That's quite a swing one way or another.  

I think I can conservatively get $16,500 in rent but I have estimated $1,200,000 in rehab costs and I fear that may not be enough. 

-What is the best way to proceed by estimating realistic repair costs if I can't get people in?

- Once I have figured out a realistic repair cost then I can assess the ARV, and determine a realistic offer price.

Thanks for you help!

Below is my rough rehab analysis that I threw together. 

My initial rough estimates - 8 total Units (2 per floor)

Work Item	Quantity	Unit per Level	# Levels	Unit Cost	Total
Exterior Painting	238	sq. ft.	50	2.25		$26,775.00
Exterior masonry repairs	1	sq. ft.	1	25000		$25,000.00
New Roof	2500	sq. ft.	1	8		$20,000.00
Structural Stabilization	1		1	50000		$50,000.00
Flooring	10000	sq. ft.	1	9		$90,000.00
Demolition	1	sq. ft.	1	1		$150,000.00
Drywall	7500	sq. ft.	4	1.75		$52,500.00
Kitchens	1	Each	8	25000		$200,000.00
Bathrooms	1.5	Each	8	15000		$180,000.00
Doors and Trim	10000	sq. ft.	1	15		$150,000.00
Plumbing	1		1	60000		$60,000.00
HVAC	1		1	75000		$75,000.00
Electric	1		1	80000		$80,000.00
Interior Painting	1		1	50000		$50,000.00
						$1,209,275.00