All Forum Posts by: Chris Bounds

Ok BPers. I said in a post a while back I'd post the numbers on a small apartment complex that I am pursuing. Here they are. Comments are welcome:

Purchase Price: $325,000
Units: 29
Mix: all one bed/bath (one efficiency)
Structure: 2 two-story buildings
Current rent: $500
Vacancy: 45% (16 vacant units)
GOI: $95k
NOI: $37k (seller's info)

My estimated repairs:
Interior (vacant units): $80,000 - mostly cosmetic with new appliances and window A/C units.
Exterior: TBD (new balcony railing $8000 + updated electrical (units have gas stove hookups currently), siding repair, and paint, possible dry wood termite treatment)

Potential 1 year outlook:
Vacancy: 11% (conservative)
Rent: $550 ($450 for efficiency)
NOI: $169k
GOI: $59.7k

The only two pending snags for me on this deal are: cost for termite treatment and cost for electrical upgrading. The termite issue is the big one for me. I hear fumigation is not cheap. Also, I'd have to vacate one building to treat it. That means either they have to move out or I have to renovate units for them to move into first - which means more upfront cost. The occupied units all need work ($60k estimated), but I had planned on doing them progressively after filling the vacant units. Even still this seems like a heck of a deal, but with my funds it could be a deal breaker - unless the seller is open to renegotiating.

Comments, suggestions, advice?

Thanks. You may be referring to Prime Loan Services. They do what you said, but their setup fees are pretty steep and I think they charge 3% when the buyers refinance.

A motivated seller that is against holding a note may be ok with a low-ball All Cash offer. Good luck!

Thanks Mat & Lyall!

Houston BPers. Do you have any referrals for good property management companies in the area? I have a 29-unit apartment complex I am in the process of acquiring. I self-manage my SF homes, but I'm going Pro for the apartment.

Once I get things locked in I'll share the numbers for anyone to critique. If it goes through this will be my first multi-family purchase.

Bryce, you can get a foundation inspector (different than a repairman) to check it out. They cost around $200-300, but they will give you an unbiased engineers report of the foundation condition. If work needs to be done they will let you know what specifically. They will come back to inspect the completed work and sign off on it for a small fee.

If you are looking to flip the property then the foundation report will be useful to have for the end buyer's bank conditions.

That being said, I have a few loose tiles in my personal home that make a hollow sound and I'm certain I do not have foundation problems.

Bruce, you can try offering owners financing for 12-18 months. That gives you time to refi with a conventional commercial loan. You'll want to have a conventional lender review the numbers for pre-approval first, of course. Otherwise, if it is cheap, cheap and the cashflow allows for it you can use private/hard money for the acquisition and then refi in 12 months or after it is fully performing. Or do a combination of both!

I'll see how this first bandit sign campaign works with my direct mail, just in other locations. I don't fault city workers for doing their jobs. Then again, every weekend I see countless bandit signs for all kinds of other businesses, whether on poles or staked in the ground. I guess We Buy Houses is less pleasing to the community than Tax Refunds Fast signs.

In better news, my first probate mailer went out today. I'm interested to see how many angry calls I'll get back from them.

Joshua Dorkin. My primary marketing strategy is direct mail, thanks to advice on BP. I didn't use bandit signs until recently when I read the blog site of one of BP's contributors. It was one of their top advertising strategies so I decided to give it a try. That being said I'm definitely not going to put any more signs up in areas where they aren't wanted. My question was more related to how much I should worry about signs I already put up.

Also, I use my VOIP line to give me a local number, to allow for multiple extensions & to capture the phone number of inbound calls. Nothing shady, just has benefits over my out of area cell phone.

No hard feelings. Always appreciate the suggestions and advice!

Wayne Brooks ouch, that's brutal. I already get that from political donations. I save those numbers in my phone as solicitor so I know not to pick up. What if you set their number on a Robo call list too just for payback! ;-) j/k