Creative Help

[Ramon Pena Alvarado]

I want to ask the creative – out of the box – Thinkers to help me with a project I’m considering.
Here are the actual numbers and I want to construct this project In a way the seller will approve my offer and be happy. I know that not knowing their motivation doesn’t help but let’ just work with the numbers. I know its over priced and the utilities are Uhhhhhh..but I can always change that after I have control.
There will be no banks involved it will either be 100 % Owner Financed or Master leased to my company. I want to enter with very little or no money down. ( Paying extra each month till deposit on ML is paid )
I’m trying to get out of my creative block. I cant seem to think of a real creative way to structure this project so.. that all involved will be happy. It’s a small project but I’m curious.

Actual
Scheduled Gross Income $209,828 Unit Mix – Studios = 5 @ $ 375.00
Effective Gross Income $181,910 1 Bedrms = 32 @ $ 417.00
Net Operating Income $77,160 2 Bedrms = 4 @ $ 575.00
Real estate taxes - $5927.00
Insurance - $8437.00
Utilities - $62139.00
Maintenance - $18564.00
Management - $7800.00
Other - $ 1882.00

Total Exp – $ 104749.00

How would you structure this???

Thanks
Ray
:cool:

[Jon Holdman]

OK, here you go. Again, based on your numbers, I'm using 70% for expenses rather than 50%. The ones you list add up to 63.4% and I see some missing items.

Gross rent: $209,828
Expenses: $146,879 (70% of gross, vs. $132,667 you list for expenses plus vacancy)
NOI: $62948
Monthly NOI: $5,246
Max loan: $714,900 (8%, 30 year, $5,246 payment)

That would make you break even.

If you want $100/unit/month in real cash flow, you have to subtract that off the NOI:

Monthly NOI: $5,246
Desired cash flow: $4,100
Max payment: $1,146
Max loan: $156,140 (8%, 30 year, $5,246 payment)

Assuming a price of $480K, I get
Monthly NOI: $5,246
Payment: $3,522
Cash flow: $1,724
Cash flow per unit: $42

So, its not awful at that price. At least you have positive cash flow. If you could turn this around and get expenses in line, it has the potential to look like this:

Gross: $209,828
Expense: $104,914 (50% of gross)
NOI: $104,914
Monthly NOI: $8,743
Payment: $3,522 (above)
Cash flow: $5,221
Cash flow per unit: $127

That assumes you get expenses down to 50% and maintain the rents. That really depends on the utilities. I just noticed you were in Denver. If the deal's here, then, first, that's a pretty good deal for this area. However, utilities are almost always included in this sort of property, so you'll have a harder time getting tenants to pay them. You're talking an average of $126/month/unit. I'd guess you have boiler heat and that's a big chunk of the utilities.