6-unit apt, all vacant, cat-lady "tenant", distress Landlord

[Jonathan Johnson]

Hello all,

Long time lurker, first time poster so be gentle.

I live in a small college town and I found a 6-unit apartment that I'm considering purchasing. I have a friend currently renting there ($600/mo) but he's moving out because the stink of a cat-lady who isn't paying rent. I assume the landlord doesn't know how to evict nice old ladies, this one even has a house that she could live in. I don't know.

My friend that's moving out, in his search for another apt said "It was priced ($600/mo) very fair. Most apts in the area that are not college focused went for the same price but much less room."

So this apt is just on the outskirts of college town so it wouldn't pull in the high rents of walk-to-campus, but close enough to still be rentable. I would rate the neighborhood around C+, as in low to middle income but still safe. It's a block away from a gas station, but tucked away on a quiet street.

Walking around the apt I didn't see any structural damage, but it's landscaping has been neglected. The inside is dated but has great dark woodwork and stain-glass windows on the central stairwell to the third floor. The appartments themselves are nice and big, 1-bd/1-ba, with big dining room and a sun-room.

The landlord is in his late 80's - 90's and is looking to get out of the business since he has some medical issues. I can tell he loves this apt because he's spent a lot of money on repairs and such. The roof leaked at one point and one of the rooms has water damage, but the roof was repaired with some sort of rubber stuff (I don't know).

I haven't walked through with him yet, but I wanted to ask you all

1. What type of questions I should ask?
2. How do I value this apartment?
   1. I don't know how to find GRM
   2. Not sure how to find similar rents in the area.
   3. NOI is about to be zero, since cat lady doesn't pay and my friend is moving out. Which could be a good bargaining tool.
3. Is there a good way to get an estimate on the rehab? Like a sheet I could bring along?

I know some of these questions, probably all of them, are already answered somewhere on here, but I am overwhelmed with all the information. Please help!

[Joel Owens]

Sounds like the owner is tired. You would be the new energy coming in. Pay attention to what is around the property. If you make the 6 unit great but other buildings around it look dumpy you will usually not land the great tenants you are wanting.

If it's off market I wouldn't alert anyone that it might be for sale. The other landlords might have wanted to buy it for years. Once you get under contract you can check for due diligence and others might want to sell as well.

The owner if they have exhausted depreciation might want to owner finance to pay gains in small annual pieces. At their age they typically do not want to 1031 into something unless it is passive triple net or similar.