New help! Advice! Multi Family Prop

General Real Estate Investing
1

Hi.
I am a new investor and want to invest in apartment units. I saw this potential property and wanted to get experienced investors opinion if it looked good. I know without seeing the property you can’t give me your total opinion but I think you can give me an idea.

I am also wondering if there is any creative way to finance this since I don’t have a lot of cash to put down.

New and need advice.

Thank you.

Purchase Price: $1,650,000.00
INCOME AMOUNT COMMENTS
Current Annual Rents $303,120 as per current rent roll
Gross Potential Rents $330,060 as per current rent roll
Laundry Income $3,000 as per owner

of Units 42 Vacancy and Credit Loss 10% $33,006 estimate as per lender

Year Built 1968

TOTAL Annual Income $300,054
Construction Brick and Frame
Square Feet (Living Area) 36712
Square Feet (Land Area) 72112 Real Estate Taxes $22,332.00 as per tax roll
Electricity $31,900.00 as per owner
Property Description Gas $5,400.00 as per owner
Water $16,300.00 as per owner
Trash Removal $1,740.00 as per owner
Supplies $2,400.00 as per owner
Insurance $8,500.00 as per owner
Maintenance 7% (estimate) $21,003.78 as per lender
Management 7% (estimate) $21,003.78 as per lender
Management (actual) $15,600.00 as per owner
Maintenance (actual) $15,600.00 as per owner
TOTAL Expenses $130,579.56

Proposed Purchase Price $1,650,000 Net Income Before Finance $169,474.44
Proposed Initial Investment $412,500
Proposed First Mortgage $1,237,500
Proposed Net Income Before Finance $169,474
Proposed Annual Finance Costs $93,862
Proposed Annual Net Income $75,612
Proposed Cap Rate 10.27%
Actual Cap Rate 10.64%
Price Per Square Foot $44.94
Price Per Unit $39,286
42 units for $1,650,000
42 unit well-maintained gardenstyle
apartment complex located. The property consists of 34 large (850’) one
bedrooms and 8 two bedrooms. Four two bedrooms are
roughly 950’ and four two bedrooms are 1350’. All of the
units are spacious and most have dishwashers, disposals,
and wall-mounted microwaves. The property is situated in an
established residential location close to retail shopping and
many parks. The utilities are master-metered and are set up
as “all bills paid.” The property is heated and cooled with a
two pipe chiller/boiler system. Historically, this property has
experienced high occupancy and continues to be a good
performer.

2

In doing a brief review of the numbers, you should not have any problems with financing. The debt service should be enough for high LTV financing (90-95%). I hope this helps.

3

Once you have purchased your apartment complex, you should also perform a cost segregation analysis. A cost segregation analysis re-classifies 39 year real property (straight line depreciation) into shorter depreciation lives of 5, 7 & 15 years, personal property. This type of analysis is done with an engineering approach, as this is what is required by the IRS. There can be hundreds of thousands of dollars in tax benefits by performing a cost segregation analysis.

If you would like more information on what this is, please do not hesitate to let me know and I will do my best to educate you on this subject.

Commercial Property Consultants