All Forum Posts by: Roberto Gutierrez

4K per unit for a total of 176k set aside for capex. For regular operations I have 12% for repairs/maintenance and approximately 2.5% set aside for replacement reserves.

I’m currently under contract on my first sizeable multifamily property. I’m including details about the property below. If you all could skim through and let me know of anything it appears I haven’t considered or anything that alarms you it will be greatly appreciated!

48 unit complex in Hopkinsville, KY

Population - ~35,000

Median income = ~$34,000

Price - $1,225,000 - $25,500 per door

Gross income - $261,000

Expenses - $127,000

NOI - $135,000

Going in cap rate – 11%

96% occupancy

Average rent across the 3 floorplans is $440, while market is at $515. $4000 per unit is budgeted in my underwriting for renovation.

Building Qualities – 6 buildings - 33,200 SF

● 1 bed 1 bath – 550 SF – 8 units

● 2 bed 1 bath – 700 SF – 24 units

● 3 bed 1 bath – 750 SF – 16 units

● Two-story

● Individually metered electric, landlord paid water

● Central heating and air

● Copper Pipes

● Built: 1975

● Pitched roofs – All replaced in August 2007

● Onsite laundry facility – Units purchased 2012

● Parking lot resurfaced 2005

● All units in good shape, with minimal cap ex required

● 1 mile from 5 star public middle and high school

● 4 units recently renovated with $100 rent increases

This is definitely a tertiary market, but population growth is on a slow rise (1% from 2010-2016). Property is in a C class neighborhood with high rental demand and very little crime. The Military, Automotive, Agriculture, Distribution, Food, Machinery, Plastics and Printing industries are the largest employers in Hopkinsville. It is also a half hour drive from Clarksville, TN, where additional jobs reside. I’ll be calling the chamber of commerce to ask about incoming/leaving employers as well as the local police department to get the low down on the property.

True, but this is a situation where the current owner didn't bother doing the environmental assessments during their due diligence period. If i don't buy this he is required to disclose this information to future prospective buyers. I don't think an experienced investor is going to take a chance on something like this, which is why i believe he should bear the cost.

Looking for some guidance here. In the process of acquiring an 8 unit apartment building. Going in with the units under market rent by $100, so there is a good opportunity for upside in this deal. There is a Pilot gas station about 120 ft (slight up gradient) from our property, and our environmental phase 1 shows there was a spill in 2011. A corrective action plan was put in place during 2013, and February of 2017 the soil contamination was said to be below the "site specific cleanup levels". In other words they have cleaned it up most of the way. Our engineers are recommending a phase 2, but the current owner doesn't want to pay for it. He is confident any contamination could be attributed to Pilot, and the tenants are also served with city water and sewer as opposed to well water.

This is a smaller deal, so i would rather not pay another $5200 on top of the $2000 already paid for the Phase 1. My thinking is that any competent investor would not carry on without getting an answer on this looming issue, even if there is a small chance of contamination.

Any input is appreciated. Would you all tell him to pay it or your out?