29 unit apartment deal analysis - Contract Phase

[Amin Hirani]

Let me start by saying a big THANK YOU! to all the BP members who have shared their experiences and advise for the common good.

I have verbally agreed to acquire a 29 unit class B apartment complex in a C- neighborhood. Below are the specifics of the deal and I would love to hear back from the members who deal with these type of assets. All feedback is welcome and greatly appreciated.

• 29 Units
• Purchase Price: $1,305,000.00
• No RUBS in place
• GPI: $237,977.00
• EGI: $214,776.00 (after removing 10% economic vacancy and 6.5% Loss to lease)
• Total Expenses: 118,587.00 (55.2%) (10% management fee)
• NOI; $96,819.00
• CAP Rate: 7.5%

There is some value add opportunity by implementing RUBS and bring all leases to the current base rent which would bring up the EGI to $242K and the NOI to $121K at a 9% CAP.

Looking forward to your responses.