I need help putting this deal together, 27 unit in decent (not great, but definitely improving area) asking 1.25MM,
Rents 156K
Operating Expenses 61K
Is this anywhere near a doable deal??
I need help putting this deal together, 27 unit in decent (not great, but definitely improving area) asking 1.25MM,
Rents 156K
Operating Expenses 61K
Is this anywhere near a doable deal??
Here’s the down and dirty shortcut I use for figuring an offer for multi unit properties:
Monthly income * 50 = Purchase price
So, I would want to pay roughly 650k for this property.
This is a fairly conservative number, but I like it that way!
With 95k/year net income, BEFORE management and vacancy, cashflow will be slim to none with a 1.25M note, taxes, and insurance. Commercial loans also usually require 30% down, so if you don’t have the cash, you’ll need a private lender or some form of owner financing.
Good luck-
Hi,
I agree with kbird.
Even with a Lender who accepts 10% down on a commercial loan, your debt service (mortgage) would be a LOT higher than your income.
Good luck.
Cordially,
Joyce :multiflash:
I agree with kbird and primeproperties.
Also If the property appraises high that can help too.
The LTV has to at 70% if you are putting little down.
However some will accept 75% ltv if the transaction makes sense.
Like most investments, commercial properties have several moving parts - especially one with 27 units.
We recently bought a five-story 40,000 square-foot office building with a 60% vacancy, below market rents short term leases very good tenants and a negative cash flow for $450,000. Within two months we leased two floors to a single tenant bringing our vacancy to 10%. Within six months, we refinanced, paid off the previous owners note and pulled out $1,285,000, part of was kept as a slush fund with remainder returned to the investors. Additional cash flows were achieved through bringing rents to market, leasing roof space for a cell phone repeater antenna and billboard. We reduced expenses by replacing all the old single pane windows with energy efficient uv solar tinted dual pane windows, retrofitted the HAVC and lighting systems. The building now has a strong positive cash flow with a 18% vacancy. Eighteen months after buying it we are about ready to refinance it again or sell it for a handsome profit.