Skip to content
×
Pro Members Get
Full Access!
Get off the sidelines and take action in real estate investing with BiggerPockets Pro. Our comprehensive suite of tools and resources minimize mistakes, support informed decisions, and propel you to success.
Advanced networking features
Market and Deal Finder tools
Property analysis calculators
Landlord Command Center
ANNUAL Save 54%
$32.50 /mo
$390 billed annualy
MONTHLY
$69 /mo
billed monthly
7 day free trial. Cancel anytime
×
Take Your Forum Experience
to the Next Level
Create a free account and join over 3 million investors sharing
their journeys and helping each other succeed.
Use your real name
By signing up, you indicate that you agree to the BiggerPockets Terms & Conditions.
Already a member?  Login here
Real Estate Deal Analysis & Advice
All Forum Categories
Followed Discussions
Followed Categories
Followed People
Followed Locations
Market News & Data
General Info
Real Estate Strategies
Landlording & Rental Properties
Real Estate Professionals
Financial, Tax, & Legal
Real Estate Classifieds
Reviews & Feedback

Updated over 8 years ago on . Most recent reply

User Stats

243
Posts
108
Votes
Moshe H.
  • Rental Property Investor
  • Ramapo, NY
108
Votes |
243
Posts

6 unit building upstate NY - 1st deal

Moshe H.
  • Rental Property Investor
  • Ramapo, NY
Posted

Hi this is my very first deal! I am looking at an REO 6-unit apartment building. It's in a small village but it's becoming kind of a trendy place, within a (long) commuting distance of the city so artistic types seem to be going there to get out of NYC. It's in a prime location in the village, near a few shops and restaurants.

The bank wants $345k but it's in pretty rough shape. Some of the fixtures, cabinets and even appliances are broken and management won't fix them in a timely manner. Even garbage pickup has been suspended for weeks because manager is not on top of anything. The tenants (I met 3 of 5 currently renting, 1 unit vacant) seem to want to stay but they're fed up. I don't think this building is attracting any other investors but me. I see some opportunity because the issues don't seem that hard to fix. I'm willing to get new fridges and cabinets and whatever else the tenants want to be happy. I'd like to freshen up the whole building and make it more attractive so I can raise the rents. It could cost anywhere from $30k-60k because I am just eyeballing it, haven't gotten a contractor bid yet.

Gross rent is claimed to be about $63k when fully rented, $52k right now, but I think I could raise rent if I just give people a decent place to live! Taxes $10k, insurance $2835, owner's portion of electric (common areas) and heating fuel (oil) $8000, sewer & garbage $2000, vacancy 5%. It looks like expenses total $27k plus maintenance costs and I would manage it myself.

I'd like to offer $275k. I have $100k in cash from a refinance and I also need cash to fix up the property. Another big factor in NY is closing costs - think $20k! So I am looking around for creative financing. I made a rough calculation that my zero-cashflow point would be a debt service of $2440/mo. Whatever I pay under that would mean positive cashflow, which is what I'm looking for.

But the building seems like it has so much potential, to raise rents and even eventually add units (it sits on a long narrow parcel about a third of an acre.) I'm really interested. Any thoughts are welcome!!!

Most Popular Reply

User Stats

8,381
Posts
4,384
Votes
Colleen F.
  • Investor
  • Narragansett, RI
4,384
Votes |
8,381
Posts
Colleen F.
  • Investor
  • Narragansett, RI
Replied

Capital expenses? roof ? siding?  does it have or require any fire related changes?

So rent looks to be 875/unit/month, is that reasonable in your area? What would units that are better condition go for?  

Also this is commercial loan so you would need to look into whether it would have cash flow coming out of the gate that would justify the loan. Do some calculations to see if with these expenses it would meet the bank criteria for writing the loan regarding debt service. Also what reserves would you need.   I don't know your area but the expenses seem to be  realistically stated but verify them. 

You could also consider what value add you can do to get a higher rent, in unit laundry? or lower expenses ,  shift heat to tenants.  These of course won't help with the initial financing

Loading replies...