Posted by Patrick S. Lawson on December 10, 2005 at 08:42:00:
…The cap rate looks to be between 11 and 12%.
Financing for 13 Unit - Posted by NechelleNYMICT
Posted by NechelleNYMICT on December 09, 2005 at 09:21:25:
I’m looking for financing on a 13 Unit with a purchase price of 367K in Charlotte, NC. The last appraisal was 378K in August of 2004. Since then the owner’s have renovated 10 of the 13 units and did minor repairs to the 3 remaining units as they were occupied when they purchased the proeprty.
The property is fully occupied with the details as follows:
Income $70,200 annual ($5850 per month rent roll - upside income potential with an additional storage unit that can be converted to a laundry room)
Expenses (annual)
Maintenance $3,600
Water/Sewer $4,200
Electricity $540 (just for common area)
Garbage $300
Property Management (8%) $5,600
Property Tax $4,490
Landlord Insurance $4,700
We’ve of course taken a vacancy/collection reserve into consideration at both a minimum 5% and a maximum 10% of the gross rents and the deal still is a winner either way.
Great deal in a fast appreciating town. My husband and I run a real estate investment advisory firm but this one is for our personal portfolio. We have over a 700 credit score.
Please let me know if you can offer financing at of course the best terms, this deal works even highly leveraged but we have the cash for 20% down if necessary. The owner was willing to take back a second but wanted to raise the price to 430K with a ballon in 5-7 years at 9.5% but the deal stopped looking as good. We really would rather seek outside funding. Thanks.
Re: Financing for 13 Unit - Posted by William
Posted by William on March 30, 2006 at 10:33:28:
Did you ever get the financing? What were the terms? I am looking for financing for the buyer for a 17 unit that I am selling.
Re: Financing for 13 Unit - Posted by E
Posted by E on December 13, 2005 at 16:15:03:
Nechelle,
What kind of term are you looking for? I can offer you very favorable terms but it would depends on what you are looking for. I have 15, 20 or 30 yrs amortization. The best would be 30 yrs of course. I could also offer up to 90% financing instead of 80% but the rate wouldn’t be as favorable as 80%. Send me an email to discuss what is best for your situation. Thx.
Re: Financing for 13 Unit - Posted by Don Dion
Posted by Don Dion on December 10, 2005 at 11:17:59:
Nice deal I get a debt service of 1.11 based on a 90% cltv 20yr amort in the pre-underwriting numbers.
Looking at the 5yr potential I did get a IRR after tax of 49.12% based on my mid line cap. I run the numbers based on 3 cap rates Bear market 7.5% Norm 8.5% and Sellers market 9%. Once the numbers are all it it will give me a range of what the IRR’s are and the potential selling prices 5yrs down the road in all three market types. Once the appraisal is in and the deal is closed I also rerun the numbers based off the local market cap in the appraisal adjusting per the current market condition posted by the appraiser.
The real numbers in this deal might come in a little lower since a few of the potential expenses are not shown ie; Advertising & Marketing - Professional fee’s (accounting / tax filing)
Re: Financing for 13 Unit - Posted by Don Dion
Posted by Don Dion on December 10, 2005 at 10:26:08:
Your income numbers seem to be off a little. When I div $70,200 by 13 units I get $5400 per month. Is the $70,200 the YTD number from the seller and the $5850 the current lease gross?
Re: Financing for 13 Unit - Posted by Andy
Posted by Andy on December 09, 2005 at 18:04:31:
Nechelle,
Looks like a great deal. Just curious, how did you stumble across this deal. I’m looking for a similar size property and just looking for new ideas to find good deals
Re: Financing for 13 Unit - Posted by Patrick S. Lawson
Posted by Patrick S. Lawson on December 09, 2005 at 15:18:25:
Not a bad deal at all. Off the cuff I would say that with 90% financing you are looking at atleast a 35% cash-on-cash return.
Re: Financing for 13 Unit - Posted by NechelleNYMINC
Posted by NechelleNYMINC on December 10, 2005 at 22:19:48:
Don,
Why would you be dividing $70,200 by 13 units and not by 12 months? You’re making an assumption that all units are rented for the exact same rent which is not the case here or even the case in most rentals. The gross rents are $5850 per month.
Re: Financing for 13 Unit - Posted by NechelleNYMICT
Posted by NechelleNYMICT on December 09, 2005 at 22:10:31:
Andy, that’s why we get paid the big bucks because we find the good deals. But besides that I enjoy the hunt for a good deal so I don’t mind combing the Internet for possible deals eventhough someone in our office does that usually. Based on our main investment area which is Buffalo, NY I’m used to getting 20-40% and more returns for our clients so it’s hard for me to accept anything less when looking for our own portfolio or when looking around the country. Good luck and feel free to contact me if you need any assistance.
Re: Financing for 13 Unit - Posted by Joe
Posted by Joe on December 09, 2005 at 19:52:29:
35% return??? You mean if they put down just 10% it will have a 35% cap rate??? WOW!
Re: Financing for 13 Unit - Posted by Seth
Posted by Seth on December 12, 2005 at 09:27:13:
He’s not actually making that assumption - he’s simply calculating the gross rent in the aggregate on a per unit basis.
Re: Financing for 13 Unit - Posted by Don Dion
Posted by Don Dion on December 11, 2005 at 11:43:08:
Guess you missed my second post. I had divided the total by 13 and then received a phone call. When I went back to the problem in the calc I forgot that I had started with the div by 13 and div by 13 again.
What I was actualy trying to do before I lost my train of thought was div by 12 then div by 13 so I could get the unit rental to put in a rent roll. Then I would be able to figure the potential gross and go on with the other calcs needed to arrive at the debt service numbers.
After posting the opps sorry I made a mistake. I did go back an put in the final numbers in your posting and I followed up with an email directly to you with an attached report form for your use which shows the debt service at aprox 1.11 based on a 90% CLTV deal , this would be a 75% first and a 15% second by the same lender at the same rate and term’s.
Re: Financing for 13 Unit - Posted by Eric Anderson
Posted by Eric Anderson on December 11, 2005 at 19:49:14:
Curious. You say you get the big bucks for finding deals. Can you e-mail me your numbers so we can speak live as I would love to talk about your birddogging services.
Thanks,
Eric
Re: Financing for 13 Unit - Posted by Patrick S. Lawson
Posted by Patrick S. Lawson on December 10, 2005 at 08:39:55:
Not a 35% cap rate…a 35% cash-on-cash return (ROI).