Ed Garcia’s 18 questions answered - Posted by John (NJ)
Posted by John (NJ) on March 17, 2006 at 12:36:09:
I’ve come across a 216 unit apartment complex for sale in Eastern PA. I’ve done a few single and 2 family rehab projects, but this would be my first attempt at a large complex. I intend to buy and hold. The owner is asking $6.2M (Negotiable). I have found out via the courthouse that he bought it in 2004 for $5.3M. But he didn’t keep up with the maintenance due to poor management.
Here are the answers to Ed’s 18 questions:
(1) Describe The Units and the surrounding area?
This is a C type property. However, the area is seeing a lot of investments and upgrades and apears to be on the uprise. Also, a Harrah’s casino is being built in this area
(2) How old are the units?
(3) What’s the unit mix ( how many 1 br. 2 br etc)
All 2 bedrooms
(4) What’s the vacancy factor in the area?
(5) What is the gross income of the units?
(6) What is the vacancy of the units?
(7) What is the NOI?
(8) What are market rents in the area?
$575-$600 for 2 bedroom
(9) Are there any other Units in the area for sale?
(10) If so at what Price?
(11) What are the going Cap rates in the area on multiple units?
(12) Have any other Units in the area recently sold?
(13) If so at what price?
$36,000 a unit
(14) How much does the seller owe on the units?
(15) If there is a loan, is it assumable?
(16) Will the seller carry a second?
(17) Is there any differed maintenance?
(18) If so, estimated cost of maintenance?
FICO score: 690
This is the preliminary information that I got from the seller to gauge whether or not it is worth pursuing. If that turns out to be the case, I will then ask to delve into the seller’s books, and do some more research on the area, to corroborate it.
I Would like some ideas as to the possibility of acquiring this property from a financing stand point. The seller is flexible on the asking price, and would consider any offer. I don’t have any cash reserves, and am more than open to taking on a cash partner.
Any input will be appreciated.