20 Unit Complex - All Vacant - Offer?

[Jason James]

Ok so I have a lead on a 20 unit complex. All units are 2 bedroom 1 bath units. All unitswill need a complete rehab. All units are vacant.The exterior of the building is in good shape and will need very little work. I have a very good handle on the SFR rental market in this area but I am not sure how well this particular area does for multifamily. Also there are a couple newer complexes in the area. The newer complexes are nice and rent for between $715 - $800. I feel I can charge $500 - $550 for these units after they are completely rehabbed, maybe more. Once they are completed and fully rented I will be self-managing the building so no PM fees.

I understand the rehab will take some time and I am very experienced in rehab work as I have done many SFR flips. I estimate it will take roughly $240k - $280k to rehab the entire project. I will be using personal funds for the rehab and in the end doing a cash out refi.

First question is would I rehab a few units and start renting them out in phases or would I attempt to get the entire project completed and then rent the units? Of course I could advertise and take applications while under construction.

Second question is how would you determine your absolute best offer price on a building that is 100% vacant, with competing units in the area that are newer and have much more curb appeal?

One consideration is that the seller has expressed that he would do owner financing until the project is rehabbed so that I can approach banks for financing,

Just looking for thoughts on this one.

Thanks