Wholesaling an Apartment Building

[Jessica Roberts]

Hello Everyone,

I am currently looking at putting a property under contract that can be converted into an apartment building. The thing is I don't know how I'd go about finding a buyer for it once it is under contract because of the work needed as well as its size. It's a 3,000 sqft building in the Overbrook section of West Philly, PA and the adjacent property is a 9 unit multi. The property would need to be completely rehabed and converted as well as zoned for such OR just made into a rooming house. The seller is asking 90k but I'm trying to get him down to about 75k. Buildings this size that are rent ready hold a value of about 250k to 350k. My contractor says he can rehab it for about 50k? Any suggestions on how to move it once it's under contract/is this a good deal. I can advertise it at my local REIA's but any other tips?

Thanks,

J

[Devan Mcclish]

First thing you should do is contact your city's zoning department to make sure you can rezone it and if so, for how much. Next thing you need to do is check the wiring for the property, you might need to rewire to conform to a multifamily property. Most investors do not want to pay the tenants utilities, and if the property is on one meter this creates an issue. If your market is requiring landlords to pay utilities then it's not a problem, so check your market. To determine value of this deal, first find the NOI (gross income-expenses). Divide the NOI by the cap rate investors want in your area. Ask local investors what cap rates they are buying at. That will determine your purchase price. To find a buyer, ask investors in your area that invest in multifamily about the deal they would be glad to determine if it's a good deal. If you have a local REIA, go to it network with other investors and you can find a buyer that way