Wholesale or Rehab/Flip REO multi-unit?

Question

Wholesale or flip REO multi-unit? What would be the best way to structure the deal?

Multi-unit Property AvailableNorth Cental Texas, near major universityFinancial Summary Proforma 
Year: 2009 
Scheduled Gross Income: $185,760 
Effective Gross Income: $185,760 
Operating Expenses: $108,659.84
Net Operating Income: $77100.18
Tax Rate: 2.39%Unit Mix Information 
1 Bedroom/1 Bath 
No. Units: 25
SF: 460 avg.
Avg. Mo. Rent: $6002 Bedroom/1 Bath 
No. Units: 2
SF: 830
Avg. Mo. Rent: $700
 
3-bedroom/2 bath
No. Unites: 1
SF: 918
Avg. Mo. Rent: $80028- Unit Multifamily Apartments, 2 bldgs. 
18,753 sq ft Occupancy: 21%; (6 units @ $525/mo.; 1 unit mo.-to-mo.)
Year Built: 1964All information includes both buildings.Estimated Value: $529,794
Estimated Cost of Repairs: $250,000 (Professional estimate)
Estimated ARV: $840,000
Each building sold in 2005 for $450,000 for a total of $900,000Recent sales in the area with 2,000-4,000 less sq. ft. sold for average of $756,000.

Thank you for your help in advance.

Marcus Ware · Answer

Rene looks like a great deal on paper,but you must where many hats to pull off a deal like this. Wholesaling me be your best option.You also need a vacancy rate without one your numbers can be way off. Good Luck!!!

Daniel G. · Answer

Find out the cap rate for both bldgs and find out the cap rate in the area.  See if they match up.  The higher the cap the better, but you also need to see whats going on there if the cap rate is very high.

I would also see if the buildings are in one tax parcel or several.  This can be a great technique when you wholesale.  If its under one tax parcel you can use that as a selling technique to end buyer in which by seperating them into different tax parcels, this alone raises the value significantly.

There are many other things to think about when flipping multifamily units because your end result is giving your end buyers value in the bldgs!!!

Much success and keep us posted on the flip of these multi's!

Steve Joanes · Answer

Persoanlly I would try to wholesale that. When you have something that can turn into such a can of worms its better to just let it go and take whatever you can get. even holding it I dont think would be a good idea.

numbers sounds good for a wholesale!

-Steve