Have Posted Before and DIDN'T get Answers. - Posted by Lazaro

Real Estate Investing Real Estate Financing
1

Posted by Lazaro on March 15, 2001 at 24:16:04:

Thank you Ed.

  1. it is a out of state seller and has someone
    managing it and is not doing a good job. They only
    care about their salary.
    2)the current NOI? It is $112,000, they are all rented
    at different rates.
    3)I believe I used 8% on my proforma for the property.
    That is a pretty good and safe number. If you are
    talking about the proforma numbers It is $198,000 a
    year with the laundry. It would be $194,000
    otherwise.
    4)Yes, we would pledge it as collateral. They are four
    single family homes.
    5)Well, they are not that close to each other. The
    $26,000 a unit is the closest property to the subject
    property. We have also had an increase in value for
    all rental property. There is a need for rentals in
    our area which makes the value increase. There is
    more people buying income producing property.
    6)Well, I hope there is a way around that. I really
    was just informing you on the specifics. If I use
    hard money then they might not care about it. That
    is why I am aiming at Hard Money Lenders.
    7)Well as I answer previously the problem is the
    management. The seller really doesn’t know what is
    going on with the property. There is a shortage on
    rentals and this property should only have a 5%
    vacancy at this time. The seller doesn’t know that.
    8)We don’t have experience with multiple units.
    However we have experience with single family rentals
    So we do know the management part of multiple units.
    Our homes are 100% occupied.
    Thank you Ed. I will call you tomo. I will probably call you early. Thank you once again.
2

Have Posted Before and DIDN’T get Answers. - Posted by Lazaro

Posted by Lazaro on March 14, 2001 at 17:06:04:

I need help on financing a apartment complex. I would appreciate any referrals or ideas. Thank you for your help. The following is all the information on the project.
(1) Describe The Units and the surrounding area? There is a primary school, middle school and a
high school within close range. There is jobs also within close proximity. It is an area of
single family homes as well as apartments. There is 40 units in this complex. They are of
concrete block. They have shingle roofs. There is also a 3 bay garage and a 1 bay garage
which is used for maintenance. One of the garages could be used for a leasing office.
(2) How old are the units? 1966/1973
(3) What’s the unit mix ( how many 1 br. 2 br etc) 22- 2/2 and 18- 1/1
(4) What’s the vacancy factor in the area? 5 - 10%
(5) What is the gross income of the units? $112,000
(6) What is the vacancy of the units? 30%
(7) What is the NOI? $74,000
(8) What are market rents in the area? $425 for 2/1 and $350 for 1/1
(9) Are there any other Units in the area for sale? Yes
(10) If so at what Price? $26,000 per unit (2/1)
(11) What are the going Cap rates in the area on multiple units? 10 - 12%
(12) Have any other Units in the area recently sold? 1 or 2
(13) If so at what price? Around $20,000 per unit (1/1 only)
(14) How much does the seller owe on the units? $400,000
(15) If there is a loan, is it assumable? No
(16) Will the seller carry a second? Yes, $140,000
(17) Is there any differed maintenance? Some, cosmetics only!
(18) If so, estimated cost of maintenance? $10,000 or less
(19) How’s your credit? C
(20) Purchase Price? $770,000
(21) What city and state? Crystal River, FL
(22) Down payment? We would pledge $108,000 worth of equity.
I appreciate all the help that you can give.

3

Re: Have Posted Before and DIDN’T get Answers. - Posted by Ed Garcia

Posted by Ed Garcia on March 14, 2001 at 20:02:23:

Lazaro,

It appears that you have picked up my commercial checklist. Good, it makes my job easier to get a feel for your deal.

Question #1. Why are the units carrying a 30% vacancy?

#2. I question your NOI. Where did you get the figures from to calculate it?

#3. your spread on your Vacancy factor is to big. I need to nail down the
factor for the area. 5 to 10% means 10%, doubles 5% which would be 100%
increase in vacancy. It also means that our NOI is off $5,600, I need the
correct number?

#4.When you say that you would pledge a $108,000 worth of equity, are you
referring to pledging additional collateral, such as another property?

#5. Lazaro, you show that previous units sold for $20,000 a door, and now
they’re selling for $26,000 a door, which in this case increases our property
value $240,000 from previous properties, why?

#6. Lazaro, Credit. You say that you have C credit. I’m sure that you know that
a bank will not take C credit. Was you hoping that I could solve that
problem for you, or did you have another idea?

#7. Lazaro, you tell us market rents are $425 for 2/1 and $350 for 1/1 which
averages out to 387.50 per unit. If I take the Gross rents of $112,000 and
average the rents I come up with $233.33 per unit. $387.50 subtract $233.33
mean that we could increase our rents approximately $154.17 per unit which
would increase the subject properties value approximately $339,174 ball
park after expenses and a 5% vacancy. My question to you is again, if we’re
are so far blow market rents, then why such a high Vacancy?

#8. What experience do you have with managing multiple units?

Larzaro, why don’t you get me these last 8 questions answered and call me at (909) 944-0199 and we can talk about how to work this deal.

Ed Garcia