Possible deal of a liftime but need some help. - Posted by Neil

Posted by Nate on January 30, 2001 at 17:08:14:

based on the information you have presented, I would say no, you should not buy them. You are a newbie and have no idea how to manage 128 units of government-assisted rental housing. Furthermore, if there is “very little cash flow” after expenses, you may not have the deal you think you have. You have not posted enough information for me to make a real judgment, but if you want a snap judgment, it’s no.

Good luck.

Possible deal of a liftime but need some help. - Posted by Neil

Posted by Neil on January 30, 2001 at 09:20:04:

I am fairly new to REI and I would like some input on this deal I found.

I have found a group of properties with a total of 128 units all are set up on government housing programs and senior housing programs all are rented with a long waiting list to get in them. My problem is that I am new to this and don’t know if I should try to get them or not. After expenses there will be very little cash flow however the properties are all in good shape and I can get them for 65%of fair market value and would have instant equity of around 1.75 million. Any advise on wether or not I should buy would be greatly appreciated.

Re: Possible deal of a liftime but need some help. - Posted by BillW

Posted by BillW on January 30, 2001 at 20:28:17:

Neil, You need to do some serious analysis on this property. Multi unit properties are valued by cash flow, and this one doesen’t look like it has enough to support a higher valuation than its’ current offer price to you. Due to this fact, the 65 percent of value you speak of may actually be 100 percent of value. How will you raise cash flow on property that has payments controlled by the government? Probably can’t, besides, these are most likely on long term contract. Now, if you were to remove all tenants and put in new tenants at 40 percent more rent, then things might work out, but that’s probably not a likely scenario.