New and need help on a deal

[Hong Lem]

Hello all,

My name is Hong and I am new to bigger pockets and commercial real estate. 

I recently found a 26 unit apartment building for sale and would like some opinions on it. The seller has listed it on the MLS for $600K. The only comp I found is a 52 unit complex down the street selling for about $1.5 million (with similar rent). The complex has 26 units (16x studios, 6x 1 BR, and 4x 2 BR). The rent ranges between $400-600/month, bringing in about $11.5k monthly. All units are currently filled except one (used as storage). The roof, AC units, tiles, cabinets, etc. have been replaced in the past couple years and no major work is needed. There is also a small laundry room on the property. Tenants pay electricity; owner pays: water/trash ($900/month), lawn care ($50/month), insurance ($450/month), electricity expenses (not for units) is $150/month. Tax for the property is about $4,900 for the year.

What do you guys think of this deal? Everything looks sound to me and the cash flow looks great. Any input/tips/advice would be greatly appreciated. 

[Scott Hollister]

Hello @Hong Lem, 

Everything might look and sound great but a lot of people may "fudge" the numbers to sell the property. 

That is: 

• It might not all be rented, or accurate rent for that matter. 
• The maintenance costs may be off. I personally don't know how big the lawn is but $50 seems really cheap for 26 units. (Its probably small but you can tell) 
• Water and trash is only $900 a month for all 26 units!? Seems cheap
• So jealous of your taxes, that is the tax for my small 3 bed rental in CT...ha. Verify that the new improvements are taxed so you don't get a surprise bump in next years tax bill. 

So basically do your due diligence and verify all the information above. One of the best quotes I see floating around is TRUST but VERIFY.