Posted by Ed Garcia on March 01, 2001 at 24:54:17:
Even though you have given us some information, it’s not enough for us to give you an intelligent answer.
Here is the standard questions I have to have answered when I start working a multiple unit deal.
(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?
Jeff this is just the beginning. In order to properly analyze a deal, here’s where to start. I meet with a bank 10 a.m. Friday morning for one of my workshop attendees who is trying to purchase 18 units at 100% financing including seller carry-back. So yes it can be done.
There is no one formula that works in every situation, with every lender. It’s a matter of knowing (A) what the lender requires, (B) what you might give them as a compensating factor incase you can’t provide exactly what they want. © It’s a matter of what you have to work with, meaning equity, cash flow, structuring of the deal between buyer and seller, HOW STRONG IS THE DEAL, HOW STRONG IS THE BUYER, must have between a 1.2 and a 1.3 debt coverage ratio, and the list goes on.