16 unit century old building

[Sharon Rolel]

I'm looking at this building, ARV (though I plan to hold) is 750k, needs 100k at least (150k pessimistic est), and the seller is down to 425k (mortgage is 410k which I will assume, though I will have to pay back some of it to make it 65% ltv). It was built in the 1920s, needs windows, roof, and units rehabbed. Renting on average 600 (tenant pays utilities) with 25% vacancy.

The area is a very nice heritage neighborhood with 800k mansions a stone's throw away, though the immediate area is cheaper, 200-300k and also has some mansions converted to apartments. The city has virtually no real crime, there hasn't been a murder or even manslaughter for years, assaults are very very rare (even though city is 200k, metro 350k pop) and their idea of a crime spree is a couple guys stealing ipads and purebred puppies. However, employment is high and the city had negative migration for the past couple of years because of it. Vacancies have been close to 15% at one point, at 8% now, still abnormally high, which is why this kind of deal is possible, the rest of Canada is mostly comically expensive. Schools around it are nothing special, it's right on the border between 1 better and one worse district, sadly it is technically in the worse district, but the high-school is good and there is a french-immersion school which is also good.

Apartments are 13 2 bedrooms, 2 1 bedroom, and 1 bachelor, which can easily be made into 15 2 bedrooms. I have been playing the renter for a day and a lot of apartments I called had already rented, and ads are at most a week old in a considerable radius around the property.

Comps are at least 700, can get to 800 with the rehab. My ARV is based on 10% cap after using 50% rule, which is more than what people are getting so it is conservative.

The property has been losing 40k a year for the past few, but has improved recently (I suspected he had apartments rented at the cost of tenant quality just to sell but the leases seem fine and are they same he had always used).

My only concern is the thing's age. Structural damage etc. I'm sure there are experts in the area here since it's such an old neighborhood in general, but if there are some specific things I should look out for, I want to know before having an accepted offer and getting it inspected.

[Aaron Mazzrillo]

I own quite a few 'old' apartment bldgs. One was built in the 1800s! My concerns (some mentioned above);

Asbestos
Lead paint
Heating unit - is it an old oil furnace or are the units individually heated?
Is it a brick bldg? I would have a mason take a look at it.
Parking
Hot water Heater
Chimney(s) if any - many older bldgs (even wood) have chimneys. As natural gas became more popular, the exhaust was ran into these old chimneys. If the chimney isn't lined properly, the exhaust from the natural gas will corrode the chimney.
Utility Meters - are all the units separately metered?
Electric - Has it been upgraded to circuit breakers or is it fuses?
Windows can be replaced one at a time, but if it is a brick bldg, you have to do it correctly or the windows can actually trap moisture in.
Also, when replacing windows, you may have to meet new egress codes. You should check with your local bldg department to see if you will have any issues.
Plumbing - some of that old stuff is cast iron and it isn't easy (or cheap) to work on and fix.

Good luck!