Half Built Townhouse/Apartment project

[Austin V.]

I know that in many areas distressed Multi-families have become a legend like Bigfoot, but I have found one in an area that I am interested in, As my experience has been limited to less than 4 units. I defer to the experts here.

There is a 24 unit 3/1.5 townhouse project that was repossessed by the note holder before they could sell a single unit. The financing was provided by a non-profit community redevelopment group(who is now the owner), however it is in a suburban area. All parcels in the development are up for sale. It was platted and approved for 24 units total and 8 were completed. The 8 units that have been completed are rented and have been at 90%+ occupancy for the last 2 years, 6 of them are being leased by a major corporation that needs housing for employees in the area. All of the infrastructure was done up front including electrical and plumbing to the area where the other 16 units would be going in.

Here are the numbers

Asking price 900K, (it was previously under contract for 800K)

Monthly Rent Roll is $8050

10% estimating property management

10% Vacancy(it has historically been closer to 6% in this area, but better safe than sorry)

Insurance estimating $350.00 annually per unit

7125.40 Annual property Taxes.

All utilities are separately metered and paid for by the tenants

10% maintenance

5% CAPEX /Reserves- The first 8 units were constructed in early 2010 so I am not too worried about major CAPEX at this point

What else am I missing?

I have done the numbers and I can complete the work on other 16 units at 75K per unit or all in for just under 2M. Which would slightly better than triple the rent roll and expenses.

The Value per unit if I wanted to sell them separately at completion would be 115K per unit. I would prefer to keep it as an income property.

Are there any options out there for financing a project like this? I think the only thing that makes sense is to try and find financing to construct the rest of the units. I have about 150K cash and have some access to some other funds to complete the project but I don't think I would be able to get beyond 250K liquid. Maybe I could ask the motivated seller to carry a second?

I guess the question was if you were in my position how would you structure the deal? Has anybody done anything similar? or know of any lenders that would touch something like this?