All Forum Posts by: David Stanford

All of those expenses you mentioned are in the $68,000. He used a care taker to manage the building, gave a rent discount to live in caretaker  Owner pays water/sewer, heat (central bowler replaced 2018) and garbage. Tenants pay electric. Windows and roof are in fair condition, 15ish years old. 

Jason, I think it's around 8% but I am not positive. I realize that is a must-know number. 

Thank you for the response.

I'm considering making an offer on a 17 unit apartment building in the southern suburbs of Minneapolis/St. Paul, MN.

Here are the summarized numbers from the owner: He keeps very precise track of all of the apartments expenses and incomes so I take them at face value. 

Annual Income 2017: $143,000 (10 1bd/1ba, 4 2bd/1ba, 3 studios and 15 stall garage)

Annual Expenses 2017: $68,000 (includes $21,000 in repairs/capital improvements, $4,600 in heat, $7,300 in insurance and $17,500 in real estate taxes. They do not include property management as he managed it himself.)

NOI: $75,000

The property is well taken care of with all major expenses taken care of within the last 10 years. Rents are at market rate. 

In my view, there is very little space for improving the operation and is a turnkey building.

The reason I am considering it is it's location is very convenient for me to manage, I know the area and am confident in the rental market there. It is not being marketed for sale to the general public, I only know about it because I happen to connect with the owner by chance.

What would a fair price be for this type of property and what kind of terms could I roughly expect from a commercial bank?

I'd appreciate any input anyone has on this. I am new to the apartment market. If there are any other numbers you'd like to know, just ask below.

Thank you. 

Hi, I can answer your questions, Chris. My wife and I are the Minneapolis affiliate of Little Pink Houses of America, based down in Jacksonville, FL. I've been a long time reader of BP forum and listener to the podcast. In fact, it was through a real estate investing podcast that I first heard about Scott Ulmer and Little Pink Houses of America and was the first step in a long process to becoming an affiliate.

We market real estate to a different pool of buyer's then you would for a traditional sale. We are looking for buyers that can afford to purchase a property and are a short period away from getting a mortgage. We help them with the process of getting mortgage qualified while they live in the house and make lease payments. Our program requires a sizable and non-refundable downpayment so that the buyer is committed to the house and the purchase. It's a great way to sell because we are often times getting full price offers and lease payments that aren't usually taken off the purchase price. This arrangement is done through a lease and option to purchase agreement.

Buyers have also been happy with our program. The biggest benefit is that through our program, they will get a custom blueprint in how to get mortgage qualified. Often times, we are following up with them on a monthly basis to track their progress. Another reason they like the program is that they get to move and settle-in to a home that they will ultimately own before they are mortgage qualified. Most of the buyers we work with are really great folks and make good money. A lot of times the buyer has had  some unfortunate life event preventing them from getting a mortgage. For example, I got a phone call a few months back from a father of 3 out in California, he works for Apple. He and his family were looking to move to Minneapolis to be closer to family. Him and his wife weren't able to get a mortgage because they couldn't keep up with the medical bills, their son and recently passed away. We didn't end up working together because we didn't have a house for sale in the location he wanted to live.

Hope that helps. I'd be happy to answer questions on here if anyone is interested.