All Forum Posts by: Nik S.

@John Cohen I appreciate your expert opinion. I'm totally willing to pay what the building is worth.... the problem is it's an off market deal so he's getting greedy thinking he can get more. Unfortunately, I flip also so my cash comes and goes quick... I guess it's never perfect. Will keep you all posted. 

@Karen Schimpf

Thanks for the response! Under its current operation, I'll be cashflowing.. the properties DSCR is conservatively 1.4x. The bank won't have a problem financing the deal either...I just feel as I am not getting compensated for the repairs as the building is on the tail end of needing a mechanical refresh... he's getting out a good time and the market is pretty strong. There's room for improvement as well (rent : occupancy) . It's also one of the very few "larger" complexes in the area. All signs are pushing me forward...

@Chris Eaker

Your exactly right...but I also think what's $125k over a 20 year span.... ?that's where I'm forcing myself to just give in... being a successful / sophisticated investor (as you mentioned), I shouldn't chase the deal if it's not where I need it to be...it's just I've been looking for something like this for the last year.... I really do appreciate all your insight everyone. Having no one to converse this deal with, it feels good to hear other investors thoughts. 

FYI : his last years RR was $270k..

@William Walker

(Michael) Appreciate the response... your pretty much spot on. The reason I am trying to ignore it is Bc it's getting harder to come by decent bigger sized buildings within my preferred price range. A lot of multifamily properties are being offered at higher prices...this one despite its capex needs meets my unit amt/price range... essentially after injecting the necessary capital, proper management and upgrades the building should bring the property value up 10-20%.... 

(William) I couldn't be more with you but essentially requesting a repair budget will net the seller the same amt...it'll definitely help me out but also my tax base will increase the higher I pay for the property which will essentially add to the additional property tax increase that can and will happen.. so I try and keep the purchase price lower to help on tax increases 

Hello all, i currently own a 50 unit apt building so I have a good idea about the business however I can't seem to properly value my next deal. Here's the basic details : (mom & pop run) 58 unit, occupancy is 80%, NOI he is showing is $120k... he skipped a lot of expenses as well as having terrible accounting. The area is in between a C/C+ (blue collar tenant base/SSI/disability fixed income) Current deferred maintenance is, parking lot (original, needs repaved)$30k replacement job, 2 original boilers (replacement cost $13k x 2= $26k, windows are mostly all original, all need replaced eventually ($40k) & about 50% of the roof has been replaced. He's a very cheap investor to say the least... but hey he's got an asset on his hands! Most units are livable but the small kitchens / bathrooms need renovated upon turnover but still decent just dated. The rents are low and will need raised within time. The building was built in 1950's, so the age is there. The units are all 2 bedrooms and have a good layout and are of good size. I can get this building for $1.3-1.325m. I can't seem to justify paying what he wants for the building knowing the deferred maintenance... I can make decent cash flow (nothing great but obviously a value add deal to help increase value/cash flow) as is but the fact is it will need upgraded as its a bit run down. I'm going back and forth and can't seem to make up my mind. I offered lower however he refuses so we've been going back and forth, he won't budge. I think he's too confident as I came in fast and decently strong. The area that the building is in currently trends around a similar per unit price... current owner hasn't done much as far as improving the property as he bought it less than 20 years ago... essentially if and when I step in, I'll be forced to do the upgrades that are necessary and bear all the expenses. I'm looking for your expertise on your initial reaction to the deal.... thanks everyone!

@James Maness

My limited experience with commercial lending is that a loan of that size doesn't qualify for non-recourse terms. Different lenders have different thresholds but I can almost guarantee that you will have to sign a guarantee, unlimited. 

Chase Gochnauer I own double that amount of apt units and my expenses in 2015 total to $136.5k for the year. If that helps give you any justification. My buildings were built in mid 70's and asset class is a c/c+

@Spenser Murphy

A 5 year term amortized over 20 years means that the total loan amount / payment will be calculated on a 20 year basis...the loan balloons at the 5 year mark and you can either A.) pay off the loan, B.) refinance C.) sell the property.

Danielle Fattizzi be careful with the numbers provided. A "hard" rehab could mean many things. There could be water damage (or other large damage ) and the units need gutted. I spent over 10k on a 600sq ft 1 bedroom apt unit... Check the units out for yourself for estimations. Don't trust the brokers verbiage, do your own due diligence. Call insurance companies to get quotes, check utility bills etc...

@Jake Gaines

They say for "pass thru income" LLC's are best. That is working well for me. I just started an S-Corp maybe 2 weeks ago. After speaking with my CPA, he recommended it for tax benefits to avoid paying some taxes such as Medicaid/Self Employment taxes...all cases vary. In addition to S-Corps, depending on profit etc, you have to pay yourself a "reasonable" salary. I am still in the learning process but I believe I am on the right path.

Again, all tax situations vary but this is my personal route for my current situation.