All Forum Posts by: Rick L.

Bump for the weekend crowd!

I'm interested in possibly acquiring a 6 unit apartment building.  However, over the past couple of years I have only analyzed and purchased 2-4 family properties.  Running cashflow projections and pro-formas was straight forward since most of these properties could be conventionally financed using 15 or 30 yr fixed rate amortization schedules.

I'm curious how other's are evaluating larger multifamily properties using Balloon and ARM loans. For instance, is it your goal to achieve the same "rules of thumb" -ie, $100/door, Debt service coverage ration, cash on cash returns, ROI, gross rent multiplier, using Balloons/Arms?

I know Balloon & ARM loans are common with commercial multifamily's, but what investment highlights are you looking to achieve and how do you get there when analyzing?

Bump for the morning crowd.

YTD  (1/1/15 - 6/30/15)

Collected Income: $27,782

Property Management:  $1609 (~6%)

Expenses:  $6029

Net:  $20,143

My Thoughts:

• Reviewing the Property management statement provided above it appears several tenants are late on rent with no long term tenants.  This might suggest higher turnover, vacancies, and evictions???
• Gross Rent of ($33,900) is much higher than actual collected rent $27,782
• Expenses (repairs & maintenance) appear elevated for a structure built in 1999. Roughly 22% of collected income ($6029/$27,782= 21.7%)

I've been approached to purchase an off market 12 family apartment building in a popular Missouri vacation area.  The seller is a real estate agent and states they are selling to raise funds for their daughter's college education.

They purchased the property from the original owner in 2012, but would not disclose what the purchase price was.  The property was built in 1999, but the seller has said they have completed remodeling each unit, some newer water heaters & appliances have been replaced, believes the roof is original along with other systems.  The property is on private sewer, which I assume means a septic system.

The tenants pays electric (all electric units), and owner pays water & trash. I'm not sure what cost are associated with maintaining the septic tank?

Taxes about $3000

Insurance $3400

Below are June's rent roll, maintenance & repair summary along with the YTD totals.  Seller is asking $415,000.  Thoughts?

@Joe Fairless, thanks for your response.  One question, I have is what do you mean by asking them what type of debt is currently on the property and why?

Also, asking them what they paid for the property...is that a common question?  I'm not experienced in this stuff, but I feel uncomfortable asking this...I feel it's too personal of a question.  Am I wrong.  

Again, thanks for your help!

Bump for the weekday crowd!

@Michael Mott, a friend of mind that I'm doing a favor for passed along the information.  

I'm entertaining the possibility of making an offer on a 12-unit non-listed apartment property.   The seller has provided the asking price, as well as, the old listing information from when they purchase the property in 2012.  What additional questions and information should I be asking the seller?

Here's what I have so far:

I have some questions about the property:

• What's the current rent roll?
• How long has each current tenant occupied unit?
  • Can you provide leases and application information for current tenants?
  • How many are HUD/Section 8?
• List of expenses (yearly: sewer, water, electric, taxes, insurance, etc)
  • Is property on city sewer & water?
• Property was constructed in 1999
  • Has there been any major remodeling/upgrades?
  • Interior & exterior photos?
• Major systems (HVAC, Water Heaters, Appliances. etc)
  • Are they originals/age of systems (1999)?
  • What has been replaced?

I'm wondering what others prefer to do in regards to the location of the stove within the kitchen?  Do you prefer to place the stove in the middle of the counter-top space to breakout the counter space?

Or do you prefer to place it at the end of the counter to allow for a continuous counter with perhaps part of the stove exposed at the end

Here the stove it in the center of the counter with minimal continuous counter space. Or, just place the stove at the end of the counter so one side is exposed. Although I personally feel as if this isn't as esthetically pleasing, it allows for easier upkeep and cleansabilty.  Also, provide more continuous counter space for tenants that cook.

When buying a Glacier Bay or cheap toilet, what does everyone replace the "guts" with to harden the toilet (please provide Home Depot link)???