18 Unit Apartment Complex Analysis HELP!

[Kristopher Edwards]

BiggerPockets Community I NEED YOUR HELP.

So I am looking at this 18 unit apartment complex to buy as my first deal. I know it's a huge jump but I am diving head first into this investing stuff and just realized how much I still have to learn just by talking to the gentleman who is selling the property who was just blowing me away with knowledge and could sense my inexperience over the phone (He does own 5 apartment buildings so maybe one day I can work from him and pick his brain.) Anyhow I am up for the challenge.

So enough about me and on to the property information:

Asking Price= $1,500,000

Recently renovated with:

New 30 year shingle roof

New Pex Plumbing

Updated wiring

Thermal Windows

2018 2 Ton HVACs

Brand new appliances in all units including washer & dryer

Granite Counter tops in Kitchen and Bathroom

18 units each 2 bed/ 1 bath, 795 square feet

They are estimating each unit will rent for $800/month.

Here are my number I have worked:

Annual income at full occupancy= $172,800

Annual Property Taxes= -$1,416

Annual Insurance= -$5,000 (the owner of the property said this was his best guess)

Annual Property Managment at 10%= -$17,280

Annual Maintenance/Cap Ex at 20%= -$34,560

Annual Vacancy at 5%= -$8,640

Annual Landscaping costs= -$1,800 (current owners rate)

Total Annual expenses= -$68,696

NOI: $172,800- $68,696= $104,104 before mortgage.

GRM: 8.6

Cap Rate: 6.9%

Based on this information it seems like a decent deal I am just lost about finding a commercial loan and where to even start in this process. I would love to find a limited partner with the money and experience who will allow me to do all the leg work and just answer my questions along the way. What are your thoughts and tips BiggerPockets? Where do I start?

[Hadar Orkibi]

Not knowing the location @Kristopher Edwards is making it hard to comment. 

what is the supply and demand situation in that market?

how big is the town is it growing?

Like mentioned above, it sound like Turn key, you will need to get it to 80%-90% occupancy before you can get proper financing on it. 

Make sure you verify his scope of work and that everything that needs Code got ticked off by the City. this is massive price different and if he got the deal that cheap it could have been that there were major structural issues. --- Check it out!

Verify the Taxes with the assessor, what would Taxes be AFTER You Buy it for 1million+.

this could jump up and kill the deal.

Get  independent Rental appraisal from local property manager. and look on apartments.com  who are your competitive in the market? what they offer? 

Work your numbers on median rent not top end rents in the market.

6.9% could be good for good / large market but crap for small town where you can buy for 9%!!  Do your homework and verify everything within Due Diligence time frame.

Good luck, H.