This is a great deal!.... Right??

[Andrew Davis]

Hey BP Community,

I'm dipping my toes in the apartment water so to speak, and someone brought this deal my way.

Here are the numbers:

$1.2 million purchase

Current occupancy: 58%

Units: 64

Average Rent Per Unit: $550 (conservative)

Area occupancy average (subject property removed): 90 + %

Why so many vacancies?:  Poor management and repairs needed in many of the units.

If I could bring the property up to market averages by renovating the units and getting a decent property manager in there, these are the numbers:

90% occupancy at $550 per unit = Gross Monthly Rental Income of $31,900.

Yearly Gross: $382,800 x 50% rule

NOI: $191,400

Tear this apart, tell me what I'm missing and if I should run for the hills or lock this down?

@Joel Owens, @Jay Hinrichs, @James Wise @Matt Faircloth, @Brandon Turner, @Joshua Dorkin  I would particularly value your input.

Thanks!

[Jay Hinrichs]

@Andrew Davis

  I would look at the reasons its in the condition its in.. many make the statement the previous owner let it go to pot.. that's an easy one...

what I have seen if this is C or D class is that they can be almost impossible to keep up and keep rented.. turn over and damage kills the property and you end up in the same boat as the seller is sitting in right now.. I have seen it happen numerous times.

and in those tough to manage buildings PM is not going to save you... many times they are the one's taking advantage of you..