60 Unit Apartment Complex - Need Advice/Help

You could try partnering with midwest-invest on here.
They are looking for apartments for themselves and other partners. Only thing is they don't want any realtors involved.

Anyway sounds like a good deal. Let me tell you in my state, they are asking three million for a 33 unit property, 76 percent occupancy, five units in need of serious repair, would cashflow at 20,000 dollars WITH 100 percent occupancy! Sounds ridiculous compared to your deal. I hope you can work something out.

Have you asked for seller financing? Is there a big time investor in your area that you trust to partner with you?

RENinja

Are the time constraints due to the owner or the option holder? If the option period expires at the end of the year, the property may still be available directly from the seller at possibly a better price.

other than do your due diligence; Red flags go up for me when they want to rush everything! If you don't have time to do your due diligence then I personally would seriously consider passing on this.

The option holder, but I don't mind going through him. The price is right and he's the one who got my attention that this deal was out there.

Yea this concerns me too, but I've reviewed the financials and the rent roll. They both are put together very well. I've also been sent several photos and it looks good. Some units need a lot of work, couple have water damage around the windows. I think the one thing that takes the longest is an environmental report which I don't see that being a problem here, i think???

I'll send them a PM, thanks

Haven't discussed owner financing, not sure if I want to show my hand yet. (I'm broke, lol) I have a couple local buyers that I'm going to discuss this with. I'll keep you up to date.

So i talked to a hard money leader who thinks they could finance around 65 to 70 percent of the asking price if I bring 219K to the deal plus some operating capital.

1 year at 13% interest only with a 6 month extension if needed and 7 points at closing

I would have to create an llc with the cash partners having at least 80% interest in the llc.

He also said at full occupancy it could be listed at around 1.6 million

But i must have a contract to purchase in order for him to start and confirm he can make it work...

It all sounds so complicated to me...You are a warrior !! Good luck with this deal...Sounds like a good one

What do you know about unit mix? Find out and check this property. How does unit mix relate to high turn over and vacancies?

On a commercial deal you first submit a LOI with earnest money.
During your inspection period you do in depth physical and financial due diligence. Tax statements, bank statements, verify the accuracy of the rent rolls. Go over all the existing leases. The owner must prove his NOI. Anyone can print up a statement. NEVER go by pro forma numbers.
Then there is the physical inspections done by your people on the ground. They should have nothing to do with the seller! What is the cost of the deferred maintenance and remodel/rehab needed.

Then when that is all done, then you sign the purchase contract and your earnest money goes hard after your inspection period.

Find an investor that will cover the down payment money(usually 20% of purchase price) and have the owner carry the rest.

Also, you forgot to add in the cost of a maintenance company. Between 5% and 10% of collected rents. You have to ask yourself, why would some one sell a property that is ACTUALLY cash flowing over $30,000 a year? You need to find that out. maybe he is just tired of doing it, maybe there is another reason!

Good luck!

Michael Mangham
MD Home Acquisitions LLC

I sent you a PM. I agree with advice that Michael gave regarding due diligence. And of course they want an offer by Friday, so doesn't every seller and every wholesaler. Its not a killer deal....I would be patient and do it right, if at all. I personally don't like the unit mix at all, almost entirely 1 beds. Think about the target tenants there. Very transient in nature, in all likelihood= high turnover. We've seen it, even those that start out in a 1 bed, eventually asking for a 2 bed. Just something to keep in mind.

"The option holder, but I don't mind going through him. The price is right and he's the one who got my attention that this deal was out there."

Assuming the option is running out, lack of planning and poor use of time on his part does not constitute an emergency on your part. He has to sell, you don't have to buy. If you want to work with him in some way after the option expires, let him know and take the time to do your due diligence properly.

I too thought there's too many 1bed/1ba units - find out how long the leases are for, and if any of the tenants have renewed their leases, and if so, how many times.
I would also ask the seller if they're willing to finance it?
Most importatnly, you need to find out what are the seller's needs? does he need cash, or is he just trying to get rid of a headache? is he retiring? You need to find out all of this and propose a 'solution' his problem.

Wishing you success,
Valerie

Just chatted with the Wholesaler and found out the owner is in financial trouble and needs the cash quick. That's the reason for the quick sell. He's offering an additional 15 day extension for due diligence. The hard money leader feels they can get everything done in that time frame.

I think with everything we've talked about on here and in PMs I'm going to see if a lower price could be negotiated and if not I'll walk away.

I'll keep everyone up to date

I talked with the wholesaler and explained that in order to close so quick and the deferred maintenance I could only offer $447,000. He replied that he had an offer at $600,000.

I just let him know I'd have to walk away if we could not get the price lower and he should get a hold of me should he come across anything else.

On to the next one...

Thanks for all the advice

Lot's of fun to read, would like to know the rest of the story though. Any updates? Plus, for future reference there is a way to work out a win -win scenario offering full price and doing the numbers if you wanted while still incorporating seller financing.

The main questions I had on this one, although I only saw this today, so in hindsight, ----
rather than asking for the whole deal to be covered why wasn't your seller just selling his option such as assigning it to you and you taking it over, and what was the option?

Maybe next time, good find though!
Thanx for sharing