Posted by paul on September 16, 2004 at 22:38:42:
Where are you located? State?
Big Apartment Purchase - Posted by Jerry
Posted by Jerry on September 16, 2004 at 20:54:58:
I have recently located an investment property that has big potential. It is a 29 unit apartment building that needs no rehabbing and has a new roof. All units are occupied with many people lining up when there is availabiity. Its worth $1.5 million and the owner is asking for $950K or best offer. I think this could be an incredible deal. The yearly revenue is $145K and the yearly expenses are $40K. So it has $105K net yearly income (rents are only $400).
The problem is that I have never even done one real estate deal. Anyone have any helpful suggestions?
Re: Big Apartment Purchase - Posted by Clair-MO
Posted by Clair-MO on September 19, 2004 at 09:09:26:
Jerry, I agree with Amy, you need to do due diligence first. Go to the court house and find out what the appraised value for the apartment complex if you want to do your own figure to determine the value. The formula is simple divide in half the annual income then multiply 100. Let me give you an illustration:
Annual income: $145,000 divided 2=$72500 X 100=$725,000 if you went to the court house and see what the county’s appraised value for the apartment complex. You will find that $725,000 is exact or very close to the appraised value. Determining the value of the apartment complex you need to purchase it as low as you can get it down too.
Re: Big Apartment Purchase - Posted by Lyal
Posted by Lyal on September 18, 2004 at 09:04:14:
Jerry,
As the others have mentioned, this is a big deal to get started on. Lots of stuff that can go wrong. My first question would be what do you base the “worth” of the property on? You need to know how to break down deals like this so you can establish the value. The number YOU come up during your due diligence is the ONLY estimate of worth that counts. What proof do you have of the expenses? Do not take the word of any realtor, owner or armchair investor for aspect of the transaction.
Check out this link for starters,
http://www.creonline.com/articles/art-148.html
then read everything you can on the commercial forum.
All the best, Lyal
Re: Big Apartment Purchase - Posted by Trevor (OR)
Posted by Trevor (OR) on September 17, 2004 at 14:28:10:
Seems to me that expenses may look a little low. I agree with the others, you probably shouldn’t start your real estate career with a building this large. It is a huge time comittment if you plan to manage them yourself.
Just a thought.
Re: Big Apartment Purchase - Posted by Kris
Posted by Kris on September 16, 2004 at 22:41:44:
“The problem is that I have never even done one real estate deal…”
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…And you wanna start with a Million dollar deal for your first attempt? Did you think of the manegement demands and the maintenance demands of a building of such size. Not a good move for a first time RE investor.
… Start with a 4 or 5 family. Hold it for 8 months. See if you like the experience. If you do then buy a 10 or 12 unit.Hold it for 6 months to 1 year. Then go for the 30 unit building. Your progression has to be natural and not forced.