All Forum Posts by: Akston Pots

Good stuff. Thanks all!

Hello BP!

I'm planning to sell one of my buildings (8-unit) and am considering doing a FSBO so I can save broker fees. Is this feasable for someone without any selling experience? Any ideas on some good places where I can list it?

Never mind.

Hello BP!

I recently got a property under contract. I had the inspection done and some unforeseen issues were discovered--nothing huge, but things that will have to be addressed before I can proceed with my original plan for a value play. 

I want to renegotiate the contract but don't want to lose the deal. My question is this: if I begin trying to renegotiate, will I then lose the right to close on the deal at the original price? I ask because I am willing to pay the agreed upon price (resist the urge to tell me that if I'm willing, that I should just close) and don't want to muck this up by trying to make a good deal into a better one. At the same time, the inspection revealed some things I hadn't expected and the place is now worth less than I previously thought. After having seen a copy of the inspection report, I hope that the seller will agree with me.

A bit of background just in case: this will be a 24-unit, under contract for $850,000, scope of investment needed to address newly-discovered issues is $15-20,000.

Thanks in advance for your input!

@Melissa Nevich

I have the actual financials and what you see if based on those. The round figures are my doing; I made them this way to make them easier to deal with. 

I've looked at the calculators but found them to be of limited use. I prefer a spreadsheet I created just for this purpose but this particular property has a lot of factors to weigh. I look to this community for help. 

Any opinion on the property's value? Is there any other info I can provide?

@Ryan Ball

There's not much to rehab as such. The $40-50,000 figure is mostly improvements I would want to make so I can make further rent increases. I can spend a little or a lot depending on how nice I want to make this place. I don't want to make it too nice because I agree with you that this area isn't ideal. Still, I suspect the the seller has no clue as to how much the place is worth and I might get a good deal.

A couple of follow up questions: Can you talk about what you know about this area and why one should steer clear of it.......or rather why you personally avoid it? Based on the figures in my inquiry, what might something like this be worth?

Hey awesome people and thanks in advance for your help :)

I will describe a property I've been struggling with for the last few weeks and hope you can give me some feedback on it. I imagine most will shy away from giving me a concrete figure (or at least a ballpark) of how much this might be worth, but that is what I'm after more than anything, though all feedback is welcome. 

There are some extenuating circumstances that make this property difficult to buy, but I will keep that grief to myself. 

Here it is then:

Location: Avondale neighborhood of Cincinnati, more towards the north and just a couple blocks from the Cincinnati Zoo and Botanical Garden. Zip is 45229. Not the best area but now the worst. Not sure what CAP others are getting here, but I should think it's at least 9% for similar places.

Size: 30 units in the town home style. All are 2-bedroom but are on the smaller end at about 800-900sq ft. All in a single U-shaped building.

Occupancy: high vacancy at 15-20%. I attribute this to the fact that property is managed by a colleague of the recently deceased owner who doesn't really give a hoot about efficiency. Furthermore, half of the units don't have fridge/stove, which turns off many prospective tenants. 

Income: currently grossing $160,000. Expenses are around 60-65% which leaves about $50,000 NOI. There is room for expenses to come down. The opposite goes for income. Average unit rents are $450. Based on my research (I'm no pro, btw), I should be able to get them up to $550/un with minimal investment and effort. Ultimately I believe $575-625 is realistic after improvements are made and a bit of side income from adding storage units and possibly covered parking, etc.

The Plan: buy, invest maybe $40-50,000 to catch up deferred maint and make improvements, raise rents a bunch, put back on the market. Two year turnaround.

Asking Price: I've been so fixated on what the owner wants that my own analysis is suffering. Classic case of overthinking. I don't want this figure to influence you in the same way so I'm omitting it. Just give me your opinion as to how much you would pay for something like this. 

Btw, this is off market and owner doesn't care if it sells or not. In other words, he's not motivated in the least.