Deciding on an Offer for an Apartment Complex HELP!

[Kathleen Heine]

Hello,

I'm hoping someone can help me a bit. I've been working a lead for over a year now and I finally have a little traction. I'm trying to analyze a small apartment complex that is mom and pop owned. 18 units 9 1 bedrooms and 9 2 bedrooms. So far, the utilities have not been submetered. The owner told me she got a quote a few years ago and it was going to cost $100,000.00. I really won't know until due diligence. Their accountant sent me an excel spreadsheet showing me the profit/loss for the apartments. In 2018 they didn't make anything off of them. The utilities alone were around $50,000.00/yr. The owner told me she's been using funds from the apartments to pay for her mom who is in a retirement home. The accountant didn't delineate any of these expenses so it's hard to know what all was included in the utilities etc.  I know how much insurance would cost and I know how much taxes are. I have a good idea of what the units will rent for once they are fixed up and utilities submetered, but my question is how would you come up with the first offer? Based on paper they aren't worth much, but obviously the buildings are worth something and it's mostly rented right now. I appreciate any feedback on you would look at this potential deal!!

Thanks, 

Kathleen