I just purchased a 52 Unit complex-is this a good idea?

[Todd Kruger]

I just purchased a 52 Unit apartment complex for $1,975,000. I put 20% cash down and got a 7 year fixed rate of 4.55% amortized over 25 years from my bank with .25 origination and receive approx. net cash flow of $6,500/monthly. This complex is about 3.5 hours away from my home and has (2) employees: On site Property Manager & and on site Maintenance person. The complex is a B type property in a smaller town (40K) with an Air Force bace. There is a very strong rental history and always fully occupied with a waiting list. The property generates approx 19% cash on cash ROI and 9.23% CAP rate. The Monthly gross income is $26k and expenses just under $19k. Rents are about 10% under market and have room form increases as units turn.

My question:  Does anyone do a sort of reverse syndication?  Selling off a portion of my existing deal to get back my $400k cash and repeating the same model over & over?  Should I even be considering this if I don't necessarily need the cash back to move forward on my next purchase?  Should I just own & operate as was my original plan or is there another more lucrative avenue syndicating to get my $400k back and having $0 cash in the deal?  THANKS BP!

[Mike Dymski]

Hey Todd.  Congrats on the purchase.  Couple of comments.

$500/month rents are typically not B class

At $10k per month ($19k - $9k mortgage), your expenses look lean, particularly with 2 employees.

Need to include a vacancy factor and cap ex reserves in your figures.

Another way to get your cash out is to raise the rents (which raises the property value) and refinance.