Need Help On Potential Apartment Deal

Price: $2,490,000

No. Units:104

Building Size: 84,000 SF

Price/Unit: $23,942.31

Property Sub-type: Mid/High-Rise

Cap Rate: 16%

Occupancy: 20%

All1 Bedroom units rents for $550/month. 650sft


Effective Gross Income $640, 050

Operating Expenses $239,920

Net Operating Income $410,120

Now I know the figures aren’t real time(pro forma) especially at 20% occupancy but could this be a good deal with creativity or am I smoking crack…

Over priced to me unless its some super nice area.

Good luck!

This is one approach I would consider. If the seller is really desperate, which can be indicated by the reduced price, I would see if I could negotiate taking this down (buying) over a period of time by breaking it into # of buildings. Assuming if it is a midrise, there are probably 10 to 15 buildings in this complex. If so, you might consider breaking this down by taking one (or two) building per month or quarter with some creative terms. Then seperate the titles of each building, mark up price in smaller units, then resell at higher prices to several other smaller investors after you have improved the occupancy rates.

So, as an example, you are buying (just guessing # of buildings) 10 buildings at a prorated price of $250k each. Offer special incentives to improve occupancy. Sell each building seperately titled for $325k (or an appropriate increased price) to a smaller investor. Repeat with other 9 buildings.

This has been a winning strategy for many of us who invest in multifamily. If the sell can and will cooperate over a year’s time, you can earn $500k in this example.

There are other possibilities if more information was available.

R.E. Investor/Mentor

I’ve seen a lot of stuff like this in Detroit lost to foreclosures and I’ve also seen a few who’ve actually managed to get a really high fill rate in these kinds of projects.

I guess the best indicator would be comps. What are similar buildings in the area selling for? Are there buildings that are close to fully rented in this area? Is there a way you can get in to view an apartment in a building that’s doing really well so you can contrast it with the building you’re interested in buying? How much are the better buildings selling for? Twice as much? Are there any historic, HUD or other kind of tax credits/grants available for rehabilitation? What kind of cash on hand do you have available to do these rehabs? You leave out so much information that it would be irresponsible for anyone to tell you to buy it.

Realtor & Investor