Newbie Question

[Nicole Williams]

So there is an apartment building with about 25 units in it. I know the owner, she actually watched me grow up. She is getting too old to keep the building. So I presented to my significant other to possibly buy the building. When I presented the idea to the owner, she thought that it was a good idea, because she dont have anyone to leave it to. So this deal is technically on the table because of me, and since I am pursuing this Real Estate career, I was wondering if there is a way for me to get the building? Is it possible for me to have a share of the building? I just dont want to make this deal happen and get nothing-asset wise.

Feel free to school me :)

[Joel Owens]

Hi Nicole,

Does the owner own free and clear (no mortgage)?? If so for older people sometimes they would like to hold a note. It helps with their taxes and creates an income stream with the property but now they do not have to manage it day to day in their golden years.

Do you have cash to contribute you or your significant other? Does the building have deferred maintenance?? Has the owner been doing the property management and maintenance themselves all these years or do they have a management company and a repair person in place??

What is the unit mix of the building?? What is the vintage of the tenant base?? Meaning how long has each tenant been in the units?? example if out of 25 units say 14 have been there 5 or more years and paid rent on time and the rents increased every year that is really good. Sometimes you have long tenant history because the rents were never raised and there is a bunch of repairs which isn't good.

The seller sounds like they believe in you and they do not know your significant other. If you have no cash to put down you would need to structure and arrangement with an attorney for a partnership and an exit strategy.

Go talk to the seller about sales price and rents per unit currently and if she pays utilities for the tenants and what she has in mind to sell to you for and post back.