I've personally inspected the property with my contractor. The vacant units (and the occupied units) are repairable. They just need a good facelift - every single one of them.
The seller is a wholesaler who picked it up at an auction. I haven't verified the competing apartment rents, but from a quick glance online the $500-600 range for a 1/1 is appropriate. That's why my first target post-rehab was $550, to give GOI a little boost without pushing the market limits.
Seller's expenses has holes in them. Obviously since it's already distressed and he isn't planning on holding he isnt paying for things like landscaping and pest control. It doesn't factor repair and reserve funds either. My 1 year numbers do.
I'm using 100% hard money with a lender I've worked with on many SF deals. PP and repairs wrapped in, the same way I buy my SF homes. My numbers show that filling only 5 vacant units makes it cash flow even with hard money. But that assumes 5 NEW tenants, not (in the case of termite fumigation) putting old tenants into new units because I have to consolidate them in one building.
I've contacted a bank that is willing to do a refi the hard money once vacancy is stabilized, even within 6 months. No cash out though. I'd have to wait 18+ months for that to be considered.
One year projected value at 8% CAP is $1.3 million.
Oh the property manager is on site. One unit manages. They are given free rent now. I'd switch that deal to reimbursed rent with extra incentives for on-time rent collection, leasing, etc. Of course, it would be on a trial basis based on performance. Once stabilized I'd look for a PM company to manage the onsite manager.
