HELP analize multi-unit #s for me please. - Posted by JDenney( OH)

Real Estate Investing Apartments
1

Posted by Jennifer(NH) on October 15, 1998 at 15:28:27:

There are a couple of things you should think about. One is electric heat. Apartments heated with electric are much harder to rent even when you keep the rents low. Ways around this include offering Winter rent discounts. The other is that the water/sewer bills and clean/maintenance for 1997 is completely out of whack with the preceding years. You would also want to find out the income/expenses to date. Another warning is that owners of apartment complexes like this are familiar with holding paper; however, in return they expect to get their price; however, it never hurts to make an offer.

Good Luck

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HELP analize multi-unit #s for me please. - Posted by JDenney( OH)

Posted by JDenney( OH) on October 15, 1998 at 14:50:18:

Thanks in advance!
I normally flip properties but I came across a 21 unit building for sale where the owner is wanting to retire and is willing to help with financing . I am familiar with the process of analizing on net rent multiplyer but would like to know what someone with some experience with milti-units would offer.
Here are the numbers and circumstances as given to me.

ASKING $735,000
*21 2-bedroom units in 3 buildings
*electric heat tenant pays
*interior dated to about 1975 and will need some updating such as new kitchens ,carpet ect to raise rents
*roof 1 yr old
*window air conditioners
*owner pays water and sewer
*onsite manager gets free rent for lawn care,clean and painting,prescreening and collecting rents
*exterior pretty decent ,needs parking lot repaved, painted
and some landscape to dess it up

  • owner raised rents last year from $350 mo to $400 mo causing high vacancy rate

realtor says owners numbers for all his properties are combined so it would do no good to see his schedule E (that sounds a little weird but I will ask to see reciepts instead)

-----------------1997----------1996--------1995
gross rent------$62,000------$80,000------$79,000
expenses
advertising-------$657---------$667---------$357
clean + mait-----$2,334------$7,496--------$5,197
credit report-----$360---------$328---------$344
electric----------$617---------$554---------$529
insurance---------$2017--------$1841-------$1787
profesional fees—$200---------$958--------$320
repairs-----------$6636--------$7188-------$5308
taxes-------------$4334--------$4330-------$4330
trash--------------$582---------$452-------$666
water=sewer------$4472--------$2979-------$2498

tot expenses----$22,209------$26,793------$21,331

net oper.income-$39,791------$53,207------$57,669

My estimation is the value to be between $390,000 to 480,000(averaging)as is.Using a cap rate of ten

How does that sound to you pros? What would you figure?

I plan on offering $550,000 by obtaining 50% ltv loan and owner carring balance with a credit of $150,000 given to me at close for deffered maitenance

Any thoughts appreciated

Thanks Again ,Jeff

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Re: HELP analize multi-unit #s for me please. - Posted by phil fernandez

Posted by phil fernandez on October 15, 1998 at 18:10:04:

JDenny,

The realtor is full of crap about not being able to tell what the property is doing based on the IRS Schedule E. On schedule E, each specific property has to be listed individually showing all rental income and all expenses broken down to what the expenses were for.

Either this is a case of realtor ignorance or they don’t want you to see how the property is actually performing.