Could Be possible Deal ?

I found a wholsaler who has a 12 unit apartment complex in California.

It consist of 8 Studio’s and 4 -1 bdroom.

The wholesaler said the seller will carry back a loan for 310k at 6.6 % interest.

He will also defer the interest only payments for 1 year, until I sell or refinance.

Wholesaler claim:

ARV 650k (No online comps available)
Estimated repairs $60-$70k
Purchase price $450k

Sq. ft. 6997
lot 10,640sq. ft.
year built 1935
2 story

Some of the units need new wall heaters/ac.The units need new carpet, paint,flooring in kitchen and bath,fixtures,cabinets and windows,countertops some plumming /bathroom work.Roofing work is possibly needed.Curb appeal is needed such as paint in and out,new fencing,removal of a tree,and some landscaping. The property is 2 stories and has wood floors that need to be refinished.The property needs fumigation.The building consist of 8 large studios and four 1 bedrooms. Onced fixed up the studios rent for around $450and the 1 bedrooms rent for around $500 - $525, giving a gross yearly income ofof around $67000 .

If you think this is a deal? What would you consider my next move be? What and how do I verify information?

If someone can give a small step by step I should be doing next?

With the carry back can I get it funded with hard money?

Should I get contractor bids for the project before buying?

Please help?

This is a terrible deal!

Income properties are judged on cash flow, unless you can find a newbie to buy them who knows nothing about the rental business.

With gross rents of $5,600 per month, the operating expenses will be about $2,800, leaving $2,800 to pay the mortgage. A commercial mortgage (20 yr, 8.25%, $450K) would be about $3,800 per month, meaning that the owner would be losing $1,000 per month. That does not even include the repairs that are needed. A good deal??? I don’t think so!


No deal… I agree with propertymanager there is not near enough cash flow here. The repairs you mentioned will probably run a LOT more than the 60-70K you mentioned. On a small single family home to do all you mentioned could run 30K. You are talking about a lot of units with plumbing problems, the roof, etc. I would definately look for something else. Have you done some small projects before or is there your first rehab? Best of luck to you and never quit!

Thanks I had that impression. Why would a wholesaler even be trying to sell these types of properties to investors?

I’m looking for my first rehab. I’ve been looking at some wholesalers properties. When I look at them they don’t make sense to me.

One wholesaler has a house that is a 2 bd 2 bth and he’s using the comps for three bedrooms. Trying to say, "Just throw up a wall to make it a 3 bd with more equity.

When I llok at houses from wholesalers in Atlanta the numbers make more sense.

I am getting determened to go out od State to do deals.

It sounds like the place is currently vacant. You’ll have a hard time getting insurance for a vacant property and it’ll cost more. You’ll also need a rolodex of contacts to do various things such as the roof, floors, etc. Way too much work for a first time project. There’s probably too many problems with this one to make it work.

As for going out of state, you should try and stay local, out of state management is very difficult and it’s hard to find people who are reliable. One investor I know used to have a management company and I’ve heard of the name and thought they were somewhat reputable. He didn’t say they were crooks, but they charged a lot and did very little and also they had their own maintenace company so when problems came up, they’d use their own maintenance company and in effect double dip. He just self manages now.

The ones that will rip you off are the ones who will say that they can’t seem to rent out your unit, but when you go there, there’s someone already living in the unit and paying their rent directly to the management company.

The price to offer for this property would be around 230k and thats after fix up and rented. Then you would cash flow. California is no good for cash flow deals and watch it if you try to flip a lot of people are getting burned right now.

Is it a good idea to rehab and sell at retail here in California?

Just want some hoest opinions.

I’ll beat Mike to it…move closer to the money. Move where there’s money to be made and invest there. Investing in CA is crazy and investing out of state is hard, especially on a first time investment.