First Apartment deal

[Account Closed]

I submitted an offer today on a commercial deal. This not the first commercial deal I have looked at, but this deal looks like it will go through.

I've done my preliminary due diligence and reviewed the numbers. The building is brick, built in 1919 and is in a downtown corridor that is undergoing significant revitalization. The building has been well maintained and has great curb appeal.

The apartment building has a nice mix of studio, 1-bdrm and 2-brm units. Located within walking distance of a passenger ferry to Seattle, shipyards which is one of the largest employers and a mid-sized college. Zoning allows for many possible commercial uses for the building. The building is a corner lot with one side facing a major through street and the other a less busy cross street.

Water, sewer and garbage paid by Landlord. Electricity is separately metered for all units and common areas. Units have electric baseboard heat. Windows are double pane and appear to be the aluminum frame type sold about 10 years ago.

Purchase Price 1.6 million

Gross Scheduled Rents less vacancy factor 280,000
Operating expenses 129,000

NOI 151,000

DCR 1.6

Next week, I will now if my offer has been accepted. Then the real due diligence will begin. I have a copy of a detailed inspection report from 2005 when the previous owner purchased the building.

[Rich Weese]

Charles- last year, when I was purchasing a 154 unit building in Dallas, I blogged the process in a series of 3 separate blogs. You might gain something by viewing those. The building wasn't as old as yours, but still same process. This wasn't my 1st either.
I've been very happy with mine. One concern for you is make-up of units. In my building, the smaller units have been more difficult to rent and higher turnover.
Good luck if it goes through. I do offer one word of caution as pointed out above. Older buildings have lots of skeletons and aches underneath, not visible on the outside. Kinda like old people!!Rich