All Forum Posts by: David Boroughes

@Lane Kawaoka

The rents would not be that high, nor is that even the potential, potential is around $1,000 or better yet $900. What I am asking for is what a good price to purchase would have to be.

@Adam Sheren

Very helpful. Thank you. That's about the price I was arriving at as well, closer to $800K to make it work. Cap rates are so low around here over the past few years, so if I can hit over 7, it would be a good deal for the area.  

@Adam Sheren

Buy and Hold. There is potential to increase rents 10%-20% very immediately, current rents are below market (mostly long term tenants, seller has owed for several decades). Only cold water and common area electric is paid by owner, all other utilities are paid by tenants. Property is fair condition, been maintained and builder grade updates over the years, perfectly average for the area. I haven't figured in debt service yet as that would change based on offer price

@Andrew Cabel Bell

I'd like to see what you have going.

Thank you

I did not include debt service in the expenses, because that is yet to be determined based on purchase price which will effect down payment and monthly payment

Looking for thoughts on offer price, I have an idea, but want to see what others think.

12 units apartment complex

asking price $1,000,000

Gross rents $100,000

Total of all expenses $35,000

NOI $65,000

down payment 25%

Finance 75% at 5% amortized over 25yrs

Thanks! @Johnny Hastings

Instead of deducting from security deposits and then paying that money back yourself, just credit it towards the first month's rent (in other words, collect $35 less when they pay 1st months rent), then the security deposit remains $500, keeps the books cleaner, and you don't have to pay back anything out of your pocket and claim less in income saving you tax dollars at the end of the year.

Looking at a small 12 unit apartment complex. Seller has income/expense reporting which indicates about $90,000 per year income and $30,000 per year in expenses (with no debt service). Asking price is $900,000. I don't qualify for any more mortgages due to debt to income ratio currently. Question becomes, could the income/expenses of the property qualify itself for a loan? where my income/debt would not be calculated in, Then I could buy it as its own entity, like an LLC. There is potential to raise rents as the sellers held the property for decades and most tenants have been there for years, I know the bank would use current rents, which is fine, but I do see long term potential cash flow increase in buy and hold here, just need to figure out a way to purchase. (I do have a down payment)

Just make your offer contingent on inspections of the well and septic systems. You may have to pay a few hundred dollars for each inspection, but it will be well worth it to know if they are in good condition or need repair/replacement, then you can go back to the seller and renegotiate.

As far as owning goes, just make sure you and your tenant treat the septic correctly and not just flush anything, since you'll be on site that should be easier to control then if you were absentee landlord.