New At Multi; Need H E L P Analyzing, Pleeeze
I have been offered this deal; tell me what to look for, ask, Thank you!
9 unit apt, small lot, and SFH 3/1.5
6 2BD/ 3 1BD
laundry room basement coins 100-150 mo. income
individual gas furnaces/A/C units, tenant paid utils.
new roof 2003
painted exterior '98
fully rented 4478. gross per month. (A 53,736)
mo. water/laundry utils 400. mo
taxes 1200 yr.
insur 950 yr.
Asking 350K
Rented to elderly Sect 8 and Nurses (across street from Hospital)
Local Financing 3/3 6 7/8 80%
What should I look for, ask, do you think this can work well?
I'm listening to the teleconference from last night; well worth the listen. Did anybody else listen?
What does occupancy look like? I.e. are all the units currently rented?
It looks like you have a NOI of around 43,000 per year for a cap rate of 12.2 % which is pretty good. Unfortunately your expense numbers don't appear to include anything for maintenance/repair and you are almost certain to have some such expenses. Does the $53,736 include the laundry income? Does it include any vacancy/deliquency factor?
~Commercial~ ...Thank you for replying!
*What does occupancy look like? I.e. are all the units currently rented?
== Full occupancy. I have not looked at the leases yet; was not sure what to ask about per occupancy. I am told that the owner got the elderly people on section 8 and most others are rented to nurses, hospital personnel. He is a Realtor and has been managing it. I have not seen the breakdown of rents per units and SFH. Should I ask for that detail?
*It looks like you have a NOI of around 43,000 per year for a cap rate of 12.2 % which is pretty good. Unfortunately your expense numbers don't appear to include anything for maintenance/repair and you are almost certain to have some such expenses. Does the $53,736 include the laundry income?
==I left out the 100-150 Mo. laundry income and the 100. Mo lot rent (Dr. office next door) for wiggle.
What repair % would you recommend?
Also, should I approach age of the appliances in any specific way?
Does it include any vacancy/deliquency factor?
==Not yet. What should I be looking at here?
Although i don't know anything about the MD area but theoritically this is a good deal. You even get to have a new roof. I will not think too much to on this deal if i can come up with the down-payment.
"== Full occupancy."
Does it include any vacancy/deliquency factor?
==Not yet. What should I be looking at here?
i'd want to subtract some number for vacancy and deliquency the "normal" number seems to be somewhere between 5 and 10%.Only local experience will give you data regarding what to use in that range.
"What repair % would you recommend?
Also, should I approach age of the appliances in any specific way? "
Since I have no information about the property I'd be reluctant to make a recomendation here. The Institute for Real Estate Management publishes an annual Income and Expense guide book which is the result of a very extensive survey of their members and which includes expense breakdowns by property type for most metro areas, it might be a good place to start.
As to the appliances, how old are they?
ceinvests - commercialking makes some very good points. You did an excellent job with the overall financial picture, but every lender will further add factors for vacancy and maintenance. 10% factor is standard for vacancy (in the residential world it is 25%).
Based on the new roof and outside update, I am making a conjecture that the property has been maintained in a better than average condition (Section 8 inspects properties and they have to meet certain standards to be certified) - as such, you should factor a 5% maintenance set aside. FYI - on properties that have not been maintained as well, or are not subject to agency inspections, you can see a 10-15% set aside requirement.
Does your local financing allow for any kind of subordinate financing or seller carry? Do you want to have to refinance in 3 years? You have a number of options available to you in financing this apartment.
try a title company. Usually they give you some free searches so as long as you give them the title inurance if you buy a property
Thanks Ks31man but what do you think I should do, should I just call them up and give them the addresses? Also does anyone else have any other resources?
Would anyone else like to chime in on this?
Are there any other methods???
Counties have a tax appraisal district. Here in Texas, we can access the appraisal district databases on-line and obtain information about the ownership and tax valuation of a propertty.
As a mortgage lender, I also have access to the on-line resources available from the title companies and these can prove to be very valuable as well. However, I will say that I find that the free and easy access of the appraisal district information to be among the most valuable asset at my disposal for evaluating properties.
Thanks bigrhino, I'll take a look at that.
Oh my god bigrhino, that's exactly what I was looking for thanks a lot. :-D