Posted by SusanL.–FL on December 03, 1999 at 13:58:30:
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“Too good to be true”? Deal? - Posted by Greg Bondy
Posted by Greg Bondy on December 02, 1999 at 15:53:25:
Greetings,
I’ve been investing awhile in mostly smaller-scale 4-plex type apartments and small office buildings. Out of the blue, a deal dropped into my lap for a much larger property (~45 units) for more money than i’m used to dealing with (Around $ 1 M). The “Too good to be true” part is they’re asking half of what it appraised for. The P&L looks okay, what else should I be sure to check for so I don’t get blindsided? Never done a deal this big before. Maybe i’m just chicken.
Thanks!
Re: “Too good to be true”? Deal? - Posted by Ed Garcia
Posted by Ed Garcia on December 02, 1999 at 19:20:47:
Greg:
By the way you have made the statement that the P&L looks OK,
your in trouble Greg.
You don’t mention where you are located ?
You don’t mention if there is a realtor involved ?
If there is, ask for a set up. A set up is a package that gives you all the
pertinent information you need to know about the property to understand
how they represent the deal.
Next you need to know what’s going on in the area as far as vacancies,
cap rates, building of newer units, if there are any demographic changes,
and comparable rents. Unit mix is important and to make sure the units
are marketable to the area is important.
For example if it’s around a college, then bachelor units could be significant.
If not, a good mix of one and two bedroom are the way to go again depending
on the rents in the area.
I have a standard formula to which I approach each deal when doing multiple
units or commercial.
Greg, I can see right now that I’m starting to get myself into trouble with this
post, because to do a good job for you I would have to really get into it,
and that would take some time.
Besides I would need more information from you anyway. So why don’t you just
call me at (909) 944-0199 and I’ll help you with your deal.
Ed Garcia
Re: “Too good to be true”? Deal? - Posted by Ken
Posted by Ken on December 02, 1999 at 16:48:13:
I think you’re letting the number of zeros get in the way of the deal. Take one of your 4-plex’s and multiply the numbers by 11. Now compare the numbers against the 45 unit how do they compare. If their equal or better then go for it. Fear is one of those things that you have to face down on each deal but as you do more it gets easier. Remember your first deal and the fear you faced. You overcame it then and you can do it now. Good Luck.