What's your max offer?

[Albert Lubin]

Hi everyone! I am calling on all investors to share your insights on how you would analyze this deal and what your max offer would be or if you'd pass. I'm considering a commercial property (16 - 1Bed1Ba units) with a current annual rent roll of $170K fully occupied. The asking price is $1.5M, go!

[Albert Lubin]

Quote from @Adam Bartomeo:

A lot of the numbers will depend on the location, which state and city. You have to know what the norm's are there. Where I am you would have a sweet deal if you got a cap rate of 7%, $94k per door is a sweet deal. 

You have to be careful with trusting the seller's expenses as it is RARE that they list all of the expenses. And, Property Management is 100%, ALL of the time, NO MATTER what, included in the expenses and NOI. Its not a choice! Its an expense that you may or may not use.

Thanks Adam, I appreciate your input. I do agree that Prop mgmt should be among Opex for a commercial property. I wasn’t sure how  experienced investors accounted for it when analyzing deals. I do find it hard to believe the seller’s expenses unless they’re backed up by some official documents but unfortunately I’ve read that I could only receive them after an offer has been made and accepted when I’m doing my due diligence. My dilemma is that the accurate numbers are needed for me to submit a fair offer.
The location does play a big role and it’s in south NJ where property prices are on the rise but not as much as northern and central NJ.