Evaluating Apartment Building for Wholesale

[Terry Royce]

I am looking at an apartment building to wholesale.
However I am having a tough time of knowing where to start to evaluate it.

The asking price of the building is 250k,
Repairs Needed are 150k
Fully occupied will bring in 8,500-9,500. per month
Property taxes: 8,700 year
Building is currently vacant due to fire.

I am unsure what lender related costs etc are typical for this deal.

Could someone give me a brief overview of how they would look at it, and analyze it.

Thanks
-Terry

[J Scott]

Originally posted by Mr_Investor:

How many units? What's the cap rate,total cash flow,IRR,COCR and debt service ratio?

Since the property is currently vacant, all those numbers are currently 0.

After rehab and occupancy, assuming the numbers he listed were accurate and assuming the 50% rule, the NOI would be about $54,000, the cap rate would be about 12%, and the ROI numbers would be dependent on specific financing terms.

I don't know where this building is, but assuming a local cap rate of 10%, the ARV would be somewhere in the $500-600K range, so a purchase price of $250K with $150K repairs isn't a huge discount, and probably not enough that he'd be able to easily wholesale the property.

That said, market conditions in the specific location would contribute; if apartments are selling for a premium in that area, it might be a good deal...