What is a good offer for this Apartment building?

[David Stanford]

I'm considering making an offer on a 17 unit apartment building in the southern suburbs of Minneapolis/St. Paul, MN.

Here are the summarized numbers from the owner: He keeps very precise track of all of the apartments expenses and incomes so I take them at face value. 

Annual Income 2017: $143,000 (10 1bd/1ba, 4 2bd/1ba, 3 studios and 15 stall garage)

Annual Expenses 2017: $68,000 (includes $21,000 in repairs/capital improvements, $4,600 in heat, $7,300 in insurance and $17,500 in real estate taxes. They do not include property management as he managed it himself.)

NOI: $75,000

The property is well taken care of with all major expenses taken care of within the last 10 years. Rents are at market rate. 

In my view, there is very little space for improving the operation and is a turnkey building.

The reason I am considering it is it's location is very convenient for me to manage, I know the area and am confident in the rental market there. It is not being marketed for sale to the general public, I only know about it because I happen to connect with the owner by chance.

What would a fair price be for this type of property and what kind of terms could I roughly expect from a commercial bank?

I'd appreciate any input anyone has on this. I am new to the apartment market. If there are any other numbers you'd like to know, just ask below.

Thank you. 

[Bjorn Ahlblad]

@David Stanford Good find! I do not know the building or the neighborhood or anything other than the numbers that were persented. Based on that I would say a 'fair' price would be 1 million. As to what terms and rates a bank will give you is really going to depend on how hard you work to get the best rate. Perhaps others will be more helpful in that area. Get a rent roll and actual financials, and have the building inspected by a professional inspector. Review the leases and have the financials checked out by your accountant. If he has been doing his own management make sure the leases stand up to your local laws. You can determine that by joining your state LL association and getting some help from them.