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Updated over 8 years ago on . Most recent reply

User Stats

45
Posts
4
Votes
Danial Qureshi
  • Investor
  • Atlanta, GA
4
Votes |
45
Posts

Is this a good deal near Spartanburg, South Carolina?

Danial Qureshi
  • Investor
  • Atlanta, GA
Posted

I'm looking at a 36 Unit Apartment Complex and I want the BP Community's opinion on whether this is a bad, decent, or good deal.

Here is a copy of the listing below:

Price: $1,000,000
No. Units: 36
Building Size: 28,000 SF
Price/Unit: $27,777.78
Property Type: Multifamily
Property Sub-type: Garden/Low-Rise
Property Use Type: Investment
Cap Rate: 11%
Gross Rent Multiplier: 5.26
Occupancy: 92%
No. Stories: 2
Year Built: 1984
Lot Size: 6.14 AC
APN / Parcel ID: 3-29-00-058.02
Last Verified: 3/18/2016

Highlights

  • Over $250,000 Invested in Capital Improvements in the Past 24 Months
  • Several Units Completely Rehabed with several HVAC/Appliances replaced
  • Upside through Rent Increase to market rate, Improved Management & adding new units
  • Well below Replacement Cost
  • Cash on Cash Return : 25.31% (I do not know how they are getting this number)
  • Internal Rate of Return (IRR) : 23.22% (I also don't know how they got this number)

Description

Value add opportunity for a new owner. 36-unit, garden-style apartment community built in 1984, the property contains 5 two-story and 1 one-story buildings encompassing wood exteriors and pitched roofs. Pacolet Pointe contains an ideal unit mix comprised of 8 one-bedroom units measuring 616 square feet each, 4 one-bedroom units measuring 588 square feet, 16 two-bedroom units spanning 777 square feet each, and 8 three-bedroom units encompassing 936 square feet each. Currently 33 units occupied and 3 other units needing rehab (2 units fire damaged). 

Questions from my analysis:

-After plugging in the information into the buy and hold calculator from BP. I'm getting a Cash on Cash Return of 6.97% which doesn't line up with the 25.31% I've called the listing agent to explain to me how he got this information, as soon as I receive it and how he came up with it I'll post it here (Link to this information is in a pdf link at the bottom).

-Also for some reason when I found the rental information from realtor.com it didn't list the 616 sqft unit  (below) pricing which I'm assuming is going to be higher than the 588 sqft, but to be conservative I'll use the price listed at 395.

-Is this a good deal why or why not? If I missed anything please do bring it to my attention I want to be able to have a good sense of what to expect and look for in future deals.

My analysis is on the link below:

https://www.biggerpockets.com/buy_and_hold_results...

This is the analysis from the Realtor/Seller:

https://drive.google.com/open?id=0B8IU2B3r4ldta2NR...

https://drive.google.com/open?id=0B8IU2B3r4ldtQmYt...

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