All Forum Posts by: Luis Barberi

Thanks @Andrew Johnson 

You are absolutely right and I appreciate the sunday sermon.  Haha. There is something about this that isn't making sense.  The rent roll shows $8K per month with 18 units rented.  The average rent seems to be $465.  The 2017 YTD (still waiting on 2016) numbers show $40K for half the year in income or $6K in income not the $8K the RR is showing.   This building is in a small rural college town so I can understand the rents being lower.  

You are right about point 5.  If I can't get the building running to capacity, then it will start to bleed due to the fact that the margins are lower however at capacity it should yield about $138 per door per month.  I am also budgeting for $50K in immediate repairs.  Not sure if it's will be enough yet until I see it and get more information.

Due to the long weekend, I would like to speak to the broker Tuesday as well as the PM and/or other PMs in the area to see if I can get it running to capacity.  It was built in 1994 so it is is not ancient and I fairly close to the down town area and the university albeit I have read about college unit horror stories.  This is why I was wondering if I could get help in getting a list of questions to ask the broker and/or PMs.

Sure,  they are asking for $750K for 26 units.

Current income is about $80K/year

Current expenses including PM, Taxes, Insurance, maintenance is at $60K/year

It should produce about $12K per month or about $144K yearly (conservativly) and Expenses would also go up a bit to about $80K leaving $64K in NOI or about a 8.5% Cap rate. I am looking at it for the cash flow as this will be a 1031 exchange for me so the cap rate is good but honestly once it is brought up to full occupancy it will be nice having the cash flow.

To clarify these are my pro forma numbers I know the ones from the broker are usually inflated.

Hi all, I am considering a deal for a 26 unit small apartment unit in a small town in not where I live. The pro forma numbers look very good but they have about 8 units that are not being rented. Currently it does cash flow with what they have by about $400 per month and will go up to $3500 -$4K once units are all rented (at or slightly below market rental rates). I'm sure their sale numbers reflect this but I'm wondering what kind of questions should I as the broker and PM. I look on hotpads, Craigslist etc and I don't even see the apartments being advertised? Reason for sale? Details on why such a high vacancy? Obviously more will come in due diligence. If I pick up this building, should I immediately replace the PM? Of course there may be a reason for it not being advertised but seems strange. Thanks in advance.

Looking for small apartment units in Atlanta and or surrounding areas in Georgia.

Please PM me if you are selling.

Sounds great I'll be there.

Thanks Todd Dexheimer do you charge per door or per bed? Any advice on the subject?

Thank you @Thomas Franklin good to know.

Thanks @Chris Tracy I am open to partnering but I was look at this for myself. I currently own an apartment in Miami which is paid for and was going to either sell it for a 1031 for the DP or use a HELOC. I am currently getting $15K NOI which I manage myself as it is paid off. I don't want to move away from something that cash flow positive into something that is cash flow neutral.

Thanks for your response @Jeff Kehl you had some great questions and I am glad I went back to the broker and asked him some of these things.

Actually it seems the slide they had on the price was incorrect as I was looking at a slide on a loan mockup which said $1.4M the owner is actually is asking for $1.7M.  He is a builder and this is his smallest property and wants to get rid of it at a loss.  It was built in 2009 pretty much turn key.  

Supposedly the reason the utilities are included is because since they focus on students - scholarships, grants etc sometimes don't cover utilities so they have decided to do an all inclusive model. However they had another PM company about 18-20 months ago which was focusing on rent as a per door where as the model should have been per bed as they are students. He mentioned while there were existing contracts in 2016 which were per door rather per bed, 2017 Income should be around $260k expenses around $169k to bring the NOI at $90K which actually increases the cap to 5.29%

As for the expenses from the PM what he said is that the $11k management fees are essentially their profits around 4.4% and then what they do is they will bill you for other services individually.  He says it is common in NC Tristate area?  

I do think the numbers are honest but I don't see the return as I will probably pay 90K in just the mortgage!  Any other thoughts?  Maybe its not the right play.