12 unit apartment in Houston with 65% seller financing

[Kamal Katiyar]

Dear Fellow Investors,

This is my first deal analysis, here are the details:

- Class C, 12 unit, $500 per unit rent, all units rented out currently.

- Property is owner managed and all expense records are not available, I am assuming 50% operating expense on gross rent, 0.5x500x12x12=$36000.

- NOI with 10% vacancy = 12x500x12x0.9 - 36000 = $28800.

The questions I have on this:

1) How do I get realistic operating expense numbers on this property? Are there resources that can help get real numbers for comparable properties in houston?

2) The tenants are currently without lease, with no credit/background check. If I have to evict any of them, what are the eviction costs and timeline?

3) What cap rate should I use to make my offer? Seller is willing to carry back 65% of the purchase price at 5%, 5yr balloon.

4) What exit strategies can this market have? 

Kamal

[Eric Tait]

Is this a self contained apartment complex, or a collection of smaller structures that add up to 12 units?  

This is important because the city of Houston requires that all apartment structures that are 10 units and over the be registered with the city.  So then a habitation inspection and an updated certificate of occupancy will be required.  That can be an expensive and time consuming proposition, so you want to make sure that they have this.