147 Units 3 Complexes
I am looking for some advice on a project like this.
Here are the numbers:
gr inc $818,813
expenses R.E. tax 68,178 gen and adm 7,300
utilities 98,000 repl and reser 29,200
insurance 21,591 acct 880
marketing and pro 2,198 about a 6% vacancy rep& maint 62 ,000 based on info provided
on site mgmt 36,000 price of 4.7 million, all
prof mgmt 38,000 brick buildings[ Edited by btaylor966 on Date 05/21/2005 ]
Your maintenance and repair numbers look light to me. My experience has been that the percentage of gross income that goes to maintenance and repair tends to go up with the number of units, however, I have not owned anything of that size. Your figures are less than 10% of gross. You might want to look at some tax returns or books to verify. Hopefully, you will get other members to offer opinions on this one.
It is a bit hard to follow my numbers this site dies not give you much room to provide information in a legeable format. This happoens to be in three different properties. The buildings are all brick so I thought maint might be lower.
Few of my repairs deal with the skeleton of the structure. Certainly, you will not have to repaint brick. Many repairs are water leaks, heaters, air conditioners, themostats, carpeting, tile, landscape maintenance. Hopefully, some people with big building experience will add their opinions. Mark (commercialking) comes to mind as someone who deals with larger buildings. He is quite active and might respond.
Again, try to verify the numbers. Checking bank journal entries against Schedule E entries to see if they are consistent with each other and with the numbers given to you seems like a worthwhile due diligence task.You might also let us know about how you found the building and why it was attractive to you.
Good luck with this. It sounds interesting.
Ed
Just found the building lookin in the paper and have not tried to talk this person down yet so not sure what kind of deal I can get on these properties. I never pay what someone is asking at least in my market. I will keep the board informed as to the next steps in the process and it has been quite helpful for all the advice you get here.
Fire out an LOI and ask for rent rolls and last yrs expenses, and leases. You can tell allot about the property by what was in the Capitol expenditures for last yr. If the current owner was trying to keep up with repairs or was waiting to pass them on to the new owner. This is the only way to really tell what its worth after reviewing the leases and when the last rental increases were. You have to DIG into the actual numbers of the business.
Good Luck,
Robert