May I have some feedback/comment on this 55 units apartment complex selling for $1.9 million.80% occupany,excellent location.Is this a feasible project to consider?
Financial Summary Proforma
Scheduled Gross Income: $354,060
Effective Gross Income: $339,607
Total Expenses: $156,212
Net Operating Income: $183,395
Looks like you have done your homework!! The main question is what do you think about this deal!!! as long as you make a decision with a open heart you generally make the right decision!!!
How much cash flow on the property?
What does your spouse think?<---- that is the most important thing!!!
If you collect the effective gross you will do OK depending on your loan amount and interest rate. Not great but OK. The pro-forma cap rate is 9.6 %. At 100% financing and a rate of 9.6 % you will break even at the proforma rents and expenses. At 80% occupancy and collections your NOI will only $127,000. At the same financing you will have to pay $56,000 out of pocket to cover the debt load. If you have no debt and paid cash then the $127.000 NOI would give you a 6.7 % return. Here again you would break even at a 6.7 % mortgage rate. I figured interest only for simplicity.
This deal will work if you can get a loan rate low enough to be supported by the property.
There are a lot of other factors to consider, a lot of which are not built into the income of the property. The main one is the probability of increasing the occupancy. Is it a waek market or weak management.
Let us know how it works out. LOL