Looking At 20 Unit Apartment Building, How Many Units Would You Want To See
Was planning on looking at a 20 unit apartment building and this will be our first large apartment building. For you investors out there who are famiiar with larger places, how many units would you want to see if you were planning on paying over 500,000 for it? The realtor told me that it will be quite difficult for her to show me all apartment units but I am thinking if I will be investing over 500,000 dollars shouldn't I see all units?
I would see one of each floor plan and then write an offer contingent on seeing and approving each and every unit.
The owner is not going to want to disturb every tennant for every potential buyer to come and look. Heck, you might decide you don't want the building after seeing the inside of the first unit. This way, you are not wasting their time or your time.
If were paying $500,000 for a large apartment building, I would want to see at least $8,000 coming in a month in rent, gross. Of course this is a rough estimate because i know nothing about the taxes, insurance, area, etc. But this is a starting point from what I got from your post...
Good Luck!
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For these apartments it is 7140 per month for rent and that is because the current owners have 20 - 50 dollar discounts if they pay on the 1st which of course can always be changed after their lease is up. So without these discounts it would be over 8,000.
I'm impressed with Mattfish's numbers, that is exactly what I would want to see. $8000 a month would make that a nice deal, specially when you consider shared roofs, yards, etc.
GL
And I would want to see every unit once under contract.
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You want to see all the units. There may be a unit that is missing something or needs a great deal of work. Which can help you with a discount in the purchase price if you do end-up buying. Just check 20% to 40% to start.
renee - As a lender on these properties, I would expect you to have seen at least one unit of each type listed on the rent rolls. I would also expect that you would have inspected the overall physical plant and all common equipment such as central heating or cooling, water, gas, etc. If there are any special deals on any of the units, i.e. unit set aside for manager or maintenance, I would want you to have inspected those as well.
I would also recommend that when you review the maintenance history of the property, that you inspect any units or areas that have had medium or more maintenance performed anytime in the past 24 months.
Best of success with your investment.
You two above that talked about 8,000 per month now that is before expenses correct (taxes insurance etc)?
Yes, 8,000 would be gross monthly income before expenses.
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$8000/mo for a $500k propery works out to a Gross Rent Mulitplier of 5.2
Your agent will probably show you the best unit(s) and she would not want to disturb the other tenants or the units that are in not so good of a shape. Your offer should be subject to inspection of every unit & records (rent rolls, leases, expenses, etc) and also state that the rest of the units (you have not seen) and appliances are equal or better in age and condition.
Good luck.
I agree with jspaeth totally. After your offer is accepted , they will feel better about showing you all the units. Good Luck!!
Mantis,
I am very impressed with you detailed information regarding commercial property inspections and due diligence required in this field. I hope that Rene Schultz and every other person to read this post is smart enough to copy, paste, and save (which is what I just did) your response to refer back when the time comes. It is vital to consult with an experienced commercial realtor and inspector that is as thorough and detail oriented as yourself.
A 20 unit building is not the time to cut corners and jump into without the proper expert help. I am currently looking out of state at mid size units (I live in Los Angeles) and this is very helpful.
Good luck renee and please keep us updated.
Take care,
Andy Gibbs
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