I am purchasing a 12-units apartments with 320k, the
same price when the owner bought it 2 yrs ago.
the property is fully rented out with $4000 per month total in rents.
However, I don’t understand why the seller need to sell it,
who just said she need to start some new business but actually she
only own it for 2 yrs. I really doubt this is the real reason for her to
sell it. When I asked her about her relationship with tenants, she
said she learned a lesson before with one of them, but she is
reluctant to explain more. Well, the 2-story building has wood
stairway and deck, some steps looks pretty new .
Do you meet this case before? It seems the price is too low for the
cash flow and the building, which looks in good shape. why the seller
only own it for 2 yrs and want to sell it with the same price?
I will be deeply appreciated if you can share your experience
with me !!
Check to make sure all the things that you can verify are right. The building is sound the leases are proper and the deposits are in place. Look at the leases because you will probably have to put some of the tenants out to get the property right.
Also verify that all the tenants are current in the rent payments. Especially since she is stating that she learned her lesson with one of them already.
There could be a dozen reasons why she is a motivated seller, just make sure evrything is as she claims.
I’m also looking at a similar deal, with the listing broker being pretty vague and not providing net sheets as requested. Do I assume that the current owners are not keeping adequate records, or is it better to assume they are trying to hide something. By running all the numbers it sounds great, but I have been unable to get payment and vacancy history from the listing broker.
Somebody may know more than me, but I have never found an apartment building for sell that was not a dog with fleas. No body sells a good apratment building. They either have deferred maintenance or the ones that are sound structurally are full of deadbeats. Most have both. I think that the way you sell apartment buildings is offer free rent to get it full of tenants, the buyer looks at it sees a full building and then buys it. The buyer then spends the next year or two fixing the property by evicting all or most of the current tenants and getting in new good paying ones. That is probably why the books are lean.
That is my problem with apartments you don’t make any money for years instead of months with single family. Also while you are fixing single family problems you are out $600 to $800 per month, with apartments you are out $25k to $40k per month.
There is no accounting for why someone will sell cheap. Don’t let that stop you, DO your due diligence and if it is a good deal, DON’T waste time asking why.
Maybe she found out she hates landlording. Many people aren’t cut out for it and the burn rate is high. This is good, it makes motivated sellers out of new landlords
tshepherd,
personally, if they won’t respond and give me the numbers, my offer will start to drop until I am sure that if I am getting screwed, that worst case senario is covered. They have to have things like bills and lease agreements or you are only buying a problem.
You might wanna do a few background checks on the tenants…the last thing you would need is a bunch of crazy druggies in there…especially when she meantioned she “learned a lesson” before. Also check out your local occupied to vacancy and maybe even renters of owner ratio …just for the heck of it- I know, I would.
that building is 30 miles from my home , located in a nice neighborhood, all other buildings are only 3-4 yrs old and it is the only one which was built in 1979. so I think it has great potential. and yes, the seller will provide all leases. It seems the leases are ok, coz they are signed in different dates and the current tenants live there for 1-8 yrs.
the owner’s husband never help her take care of the building,
she has a job, a family and children to take care of. She is also starting a school teaching some children recently and she told me her time is streched so thin that she doesn’t have any time to manage it.
can anybody teach me how to check out local occupied to vacancy and renters of owner ratio ?
thank you again ! You guys make the forum so helpful!
I sometimes go to the following site : http://www.bestplaces.net/zipr/zippick.asp they have statistics on Demographics, Crime, Housing(vacancy/occu), Education, Economy, health and Climate. Hope that helps man
