There is an 11 unit apartment complex for sale in my area that I believe has some value-add opportunities. However, this would be my first foray into a commercial multi-unit. I do have some experience with rentals as I have two townhouses and a duplex. I have $155k in liquid cash, access to a $55k unused HELOC, and my rentals have a combined $298k in equity of which I could pull approximately $152k if I refinance, which I'm considering doing.

As far as the apartments, the sellers are quite firm on $800,000 however, it only appraised for $700k (based on rental income).  A commercial lender is willing to finance the $700k with only 10% down, I would have to fill in the $100k gap out of pocket.  Further, there will be about $50k in major cap ex needed over the next 1 to 5 years.  The apartments are in a good area and fully rented with some long term tenants in place.  Current rents are coming in at $7150 per month.  These are organically below market rates by at least $125 per unit, being extremely conservative in that estimate.  However, with all that's going on these days, it appears comparable units in the area shot up between $200-$250 or more in some cases.  I hesitate to use those numbers because I'm not sure how sustainable they really are.  Gross expenses come in at $38k per year and includes approximately $8k in utilities which I plan to pass on to the tenants.  I also plan on reducing landscaping and water expenses by converting large, unused grassy areas to desert landscaping.  So to break it down a bit:

• Purchase Price:  $800,000
• Finance:     $630,000 ($700k - 10% down)
• Out of pocket:   $176,000 ($70k down + $100k gap fill + $6k financing expenses)
• Cap Ex:               $50,000 (over 1-5 years)
• Income:              $85,800
• Op Expense:        $38,000
• 5% Vacancy:          $4,290
• NOI: $42,290
• Debt Service:      $44,600
• Profit:                  -$2310
• Monthly:                 -$193
• Per door:                  -$18
• CoC: -1.3%

My finances: 

• Liquid Cash:       $155,000
• Available HELOC: $55,000
• Available Equity: $152,000 

Post-purchase value-add:

• Rent increase:       $16,500 (at $125 per month per unit)
• Pass on utilities:      $8,000
• Landscaping savings: $1400
• Total:                     $25,900

New numbers:

• Income:                $102,300
• Op Expense:            $28,600
• 5% Vacancy:               $5115
• NOI: $68,585
• Debt Service:           $44,600
• Profit:                     $23,985
• Monthly:                    $1998
• Per Door:                     $181
• CoC: 13.6%

As you probably noted, I don't have the full cash amount ($176k) required to cover the down payment and the sale price gap so I will have to borrow $21k from the unused HELOC. This will leave me about $34k available for emergencies for all properties until I can refi my current properties. Once I do refi, I plan to repay the HELOC. That would leave me with about $131k cash from the refi for the cap ex and emergencies. Also, refinancing will mean my current properties will barely cash flow. Keep in mind too that the rental increase I used is very conservative by today's market. The number I proposed is what the rents should be at regardless of the craziness however, I'm sure I can increase it by more and I will where I can as leases expire.

And if this doesn't seem like a good deal, or if it doesn't go through, how should I use my available cash?  I can pay off two properties with that amount.  Or should I hold on to it for better deals?  Should I still refi and pull equity?  Any advise will be greatly appreciated!