Potential Townhouse Property Deal Analysis

[Kevin Dickson]

Hey Guys!

I came across a wholeseller that had 5 units (4 - 3/2s & 1 - 2/1) in a townhouse community in South Atlanta for $150,000 total. He said that each unit needs about $30-40K of rehab. I did some research on Craigslist/Rentometer to see what market rates are for 1500 sq/ft 3/2s and I $850 on Rentometer and about $970 on craigslist.

If I assume that I can get a loan for $262,500 ($150K asking + $200K rehab - $87.5K down payment), the monthly payments would be $1,975 and the gross rents (using a conservative figure of $750) would be $3,750. That would be $1,775 net. Granted I haven't taken into account cap ex, etc but if we are rehabbing it you aren't REALLY needing to use a high number in cap ex/maint because I assume an investor would be putting in new water heaters and HVAC with warranties.

ANYWAYS lol. The deal looks great but in speaking with the wholesaler, he told me that the entire property is 49 units and the seller wants to divest of the whole thing so I kindly asked how if I could hypothetically get all 49 units for $1M and he said that could probably get done.

So I have been really thinking about it and if I had 49 units and I estimated $25k per unit to fix up (another assumption I am making is that we could get pretty good discounts on materials and overall labor since the scope of work would be SIGNIFICANTLY more than just 5 units).

$1,000,000 acquisition + $1,225,000 to rehab 49 units = $2,225,000

$556,250 would be the down payment leaving the loan balance to be: $1,668,750

Monthly payments on that loan would  be about $14,000

Monthly gross rents (at 85% occupancy and $750 per unit) would be $30,750

What I want to know from you all is:

Using these rough numbers, does this sound like a good deal?

Have any of you purchased an entire townhouse community? If so, what are the advantages?

What questions should I ask the wholesaler?

What other costs (besides property management) should I REALLY take into consideration?

If the numbers look good to you and you have experience, would you be willing to partner with me for a larger piece of the pie? (60/40)