All Forum Posts by: Chris Lupcho

Thanks for the info. Unfortunately that does not really answer my question. To be honest I will likely manage the properties myself - therefore I budgeted 20% for vacancy and maintenance. I suspect when a bank calculates NOI they will include something for property management which is why I included that. So add 5% additional to my numbers for that column - property management, vacancy and maintenance. Numbers would then be NOI of 42K - at 10% cap, value of 420.

My question is really focused on what to do with such a large deferred maintenance - 150K or more in regards to calculating an offer. If I messed up on the other numbers I'll take that as a learning experience. Just really interested in what others would do when writing an offer and trying to include this deferred maintenance? Do you calculate the NOI of the property as though it was properly maintained and then deduct the cost of deferred maintenance?

I am planning to improve the property and increase rents in the process.  I doubt anyone would take those numbers into account though when writing an offer.

Thanks again for any additional input.

Chris

I have an opportunity to purchase an 8 unit property but struggle with calculating an offer.  My issue is with figuring in approx 150K of deferred maintenance.  

Numbers look like this:  Gross income 72K.

Taxes and insurance 12K

Property management, vacancy and maintenance - approx 20% (14K).

NOI 46K. I believe that a 10% cap for my area is appropriate - therefore I would put a value of 460K on this house.

My issue is that it probably needs 150K because of neglect - past due issues of roof, windows, siding, etc.

Should I take the value and subtract the repair costs - resulting in a value of 310K?

Thanks for any help,

Chris

I am interested in information on how to close/structure a deal with a pre-foreclosure house.  I have assess to the county website and know what houses are scheduled for foreclosure/sheriff sale in the coming months.  I have researched which houses would work well for me, from a numbers standpoint.  I have the owners info from the county website.  

How do i approach the owners with my interest in buying their property?  Would this end up being a short sale, if my offer is lower than their current mortgage balance?  How long would the process take, could it be done if they only have 1 month until the scheduled foreclosure - if its structured as a short sale would that cause the foreclosure process to be put on hold?  

Thanks for any help on this.  I may develop follow up questions once I get more info on these.