My first serious deal - 9 condo package - analysis advice

[Angie Menegay]

Hi all,

I've been looking into this one particular deal, and the numbers seem fairly great. I'm not sure if it's one of those "too good to be true" instances or it's a legit one. Any advice is greatly appreciated!

(By the way, even though we are already pre-approved for a similar amount for residential purchases, since we'd like to obtain a commercial loan that could help cover all of these 9 condos, we're having to start over with a commercial banker (*SIGH*). That process is not going very fast either... :cry: )

Asking Price: $269,000
Gross Income: $66,282
Net Income: $33,522
Cap Rate: 12.42%

The complex is professionally managed by HOA, so all expenses are easily verifiable (I'm requesting those documents from the seller). It's a nice area, so I expect vacancy to not be more than 10%.

I've spoken to the agent/seller a couple times and he seems to be a genuinely nice person. He's also offering seller financing at 7%, 30 amortization with 5-year baloon, 30% down. I might opt for this route if I can't get any traction with the commercial banker.

Basically I have nothing but all great feelings about this package, and I need someone to perhaps whack me in the head for something I'm missing. I also know that condos are not the greatest RE vehicle in terms of appreciation, but we're content with the equity payoff of this deal.

Thanks in advance!
-AM-

[Rich Weese]

Angie- You asked for it, so here comes the whack in the head.
1.I'll continue to post the same. Condos suck, for so many reasons.
2.I don't know how you were approved for 9 loans previously.
3. What equity payoff.
4. Have you ever met a selling agent that "wasn't" a genuinely nice person?
5. Is this a fractured condo project?
6. What are the HOA fees and how many owners are delinquent?
7. Have you ever held a keg of dynamite before? (5 yr balloon)
8.Age of units?
9. Condition of roofs and driving areas?
Some others can address the income/expenses problem. I'd tread very slowly, or run fast the other way, tic. Rich