All Forum Posts by: Neel Patel

 Indeed, there are not many properties like the one that I am trying to buy. The big ones where it has around 100 units sold for $1.8 M in 2010 which is a long time ago. It would definitely cost more than $1M if I were to build a property like the one I am dealing with, but the rent would not justify paying the high price.

 That is a great suggestion, but Seller said firmly said no the first time we spoke. 

I think the only thing that can be done to this property is a rent increase. I don't think there is anything else that could be done to increase the property value. The property is located about 50 miles away from Huntsville, AL. I don't see the city growing anytime soon. A lot of people move here after their retirement. The building age is around 24 years. The owner has managed it well. I did miss County tax but adjusted that number earlier. 

Update: I gave him $680K offer and he denied it. He didn't want to listen why I was offering the price vs he's asking price. 

I went ahead and update all the expenses accordingly to what everyone suggested. Sorry for not including full detailed info on what I am looking at. 

I calculated rents per unit to be $625.

I put a purchase price to be at $700K instead of $800K to calculate the numbers. 

Yes, seller wants $1M for sure. Not sure he will accept the offer, but we'll see. 

 Agree, I have set aside 10% for Maintenance, 5% for Capital Expedentiure, accounting, and lawn mowing fees. 

I cold-called the seller to see if he was interested in selling. He mentioned I'll sell it if I get my price. The seller used to live in the same town where the property is. Now he lives in FL. 

I am going to give him my offer by explaining why I decided to offer the price with backing arguments. 

1. Buying at my price will give me a CAP Rate of around 6% which is what I aim for in a deal

2. A buyer would look at a similar return if he were to put it on the market

3. He'd have to pay Buyer's and Seller's agent fees had he put it in the market

I am hoping he understands I am giving him valid reasons to buy the property at my price. Please feel free to give me any more suggestions if you have any!

Thank you guys for the insightful response @Drew Sygit @Sanjay Hegde @Benjamin Fritz

Hey everyone, I got my first multi-family deal by called calling the owner and need some tips on how to negotiate the deal. The owner is currently asking $1000000($83333 per unit) for 12 units brick apartment in a rural town with 7K population. The total rent is $6995 for 12 units, which averages $577 for a unit. The rent can be increased to $625. The demand for apartments is strong in the area.

Approximate Expenses: $2,416 (Maintenance: 5% of the rent, Capital Expenditure: 5%, Vacancy Rate: 5%, Property Management: 0 since I will be managing it. I was going to set it to 5% but figured this is my first deal and don't want to miss on the right property)

NOI: $4,994

Cap Rate: 6% 

COC: 1.1%

I was thinking to make around an $800K offer. The reason why I am thinking to give that offer is that I am not counting management fees and the rents don't increase too much in the area. Feel free to give me any other tips that you might think will be useful.  

Thank you!

Welcome to the BG!!

Hey everyone, 

I am closing on my new built house in Hazel Green, AL in a month from Davidson Homes. I need some advice on few things as far as the initial walk is concerned. 

I need some referral of professional who has experience inspecting new Homes. I have walked through the house and I noticed  one of the wall in the back side of my house isn't straight(Probably very  minor). It is not obvious to a person who doesn't look thoroughly. Not sure what I can do with that. I haven't talked to the builder contract yet. I want to know what options do I have. 

I also would like to know if I should get thermal camera inspection or not.