Posted by Ed Garcia on February 24, 2001 at 09:26:30:
Misty,
Obviously this deal is multiple units.
We need more information before we can go any further with your deal. Here are a battery of questions I ask when beginning a deal such as yours.
(1) Describe The Units and the surrounding area?
(2) How old are the units?
(3) What’s the unit mix ( how many 1 br. 2 br etc)
(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?
(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?
(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?
(19) How’s your credit?
If you answer these questions, then I can answer yours, with a meaningful answer.
Otherwise, it’s just, What ifs? or hypothetical.
Misty, I will tell you this. I won’t go into to how I’ve looked at this deal with the minimum information you’ve provided, but taking your information, I plugged in a 5% vacancy factor and using a generic formula, I will ball park your NOI ( net operating income) at $23,760. With the selling price of $185,000 that gives you a ballpark Cap rate of 12.84. That’s not bad. The only reason I tell you this, is because I want you to know that I think this deal, is a deal worth pursuing.
Ed Garcia