ATL 21 Unit Apartment Deal Value Add Deep Dive (Deal or No)

[Garreton Smith]

Hello BP Fam, 

I've been running numbers on several value-add commercial apartment buildings. Most of the deals I'm finding are on LoopNet. I wanted to share some numbers and deal breakdowns with anyone who wouldn't mind taking a look and giving their input. I'm looking to jump into these kinds of deals in the near future and with the right partnership. 

21 Unit ATL Deal

Numbers
⁃ Purchase Price $2,100,000
⁃ Rehab $280,000
⁃ Closing cost/ acquisition fees etc 5% of PP
⁃ Lender will request 30% of Purchase 20% of rehab liquid
⁃ $630,000 + 56,000

Current condition
⁃ property is underperforming
⁃ 50% of tenants are in arrears

⁃ each unit needs cosmetic upgrades

The value add
⁃ clear each unit in arrears
⁃ Upgrade each unit $8000-10,000
⁃ Raise rents to market value $1000-1200

Long term/ Exit
⁃ Turnover each unit with market rent. Increase the NOI (net operating income)
⁃ Refinance out of short-term loan until fixed arm. Pull out 700K initial investment
⁃ Raise the value of the building to pull out additional 150-200K
⁃ Keep on rent roll and monthly cash flow with $0 in the property