@Jonathan R McLaughlin Thank you very much for the feedback!
capex seems WAY, WAY low. - What would you suggest this should look like? The properties are fairly new (3-5 years) so I wasn't banking on a lot of repairs for the first few years.
Repair low - I am going to adjust this up a bit, thanks!
Turnover costs? - These are included in the 11% mentioned below. Unless you are thinking there are other things I should be thinking about other then vacancy, cleaning, minor repairs?
ongoing legal and accounting? Included in the numbers I put in the report
lease commissions? Included in the numbers I put in the report
Management costs seem high at 11% so you may have some of this baked in. I believe this 11% will come down but wanted to leave it there for now to "assume the worst".
Not sure how you are going to get a 30 year amortization on the main note? You'll need to structure this as a commercial loan so 25 is max and 20 more likely. Reset on rate every 5 years and/or 10 year balloon. FHLB 5 year rate is 3.08+2.25 spread (YMMV but it will be similar method of computing rate) so at least 5.4% I'd bake in 6 to be safe as these can take a while to close. - The current owner is offering a 30 year amortization with 10 year balloon on the balance after the 600k down. Are you saying he isn't allowed to do it that way and we will be forced to do it as you mentioned above?
loan fees--call it 12K -
Closing costs will be a lot more than 3K--you need an appraisal at least at 1500 and maybe more, you will need the partnership agreement drafted (welcome to lawyer land!), environmental phase I and maybe phase II, company filing blah blah. Figure 15k-20K You will want your own inspection during due diligence thats another 1200 or so.
Does the 25K you put in the repair costs really yield 200K in immediate value increase? I'm skeptical, what is the plan? Should've been more clear on this. I estimate 25k in upgrades (probably a little higher then needed) but the deal, if it happens, will also include 16 acres of land currently worth $200k. That is the increase I put on this.
"Find investors to put in the first 600K"--thats a pretty big raise: and where is your money? I have been working on getting investors for some time, and continue to add to my network so I feel pretty confident that the investors I have already spoken to will buy into the right deal. Which is why I am here :-) Side note* My profile says I just signed up but I've actually had an account here at BP since 2016 so I've been doing a lot of research. My money is tied up in my Construction company so the goal is to use my contacts money for the DP and sign the note myself. Still working on all the details but that is the plan.
Are the taxes current or based on the new purchase price?--I've been whacked by making that "should have been obvious" mistake. - Noted! I will adjust accordingly.
Trying to help, not be negative. Run the numbers again, maybe, with these assumptions and see what you get. - I certainly appreciate the feedback! This is why I have come to love BP!!
