What is the real value this property

Can somebody tell me how much is realy worth this property?
44 Units
asking price-$1.275.000
rental income-$246.960
laundry income$6.000
net income after expenses$151.776

I’m calling bulls**t on their laundry numbers, I’m gonna say more than likely its grossly inflated. This is a commonly inflated number since you can’t verify it. Think about it, do you think they are averaging over $11/unit per month in net laundry income? Keep in mind they are either paying to maintain their own machines or using a leasing contractor and splitting the intake 50/50 or something like that so that means they have to be taking in about $23 a month per unit in laundry money. Considering many people use external laundromats, don’t bother washing their clothes (pigs), or otherwise don’t use the machines much I think you can call that one a lie. I wouldn’t even count it in your income at all, just exclude it and whatever you make on laundry will be gravy.

Other than that I’m wondering why it’s 40% vacancy? Sounds like a huge upside if that’s correct. What are the normal rents per unit in this building? What is the potential gross monthly rent? Any clue why the vacancy is sky high? Lazy management, outdated units, skyhigh rents?

I agree with Rich. This property has huge potential.

rental income $246.960
expenses $102.001
net income after expenses $151.776

How did you get this?

Here are some questions you NEED to find out:

  1. Is the $246,960 potential rent or actual rent
  2. What repairs are needed?
  3. Is the location decent or is it in the middle of no where?

Get the answers to these questions and I’ll give you the max I would pay.

Given what the answers to the questions above are I’d possibly be looking to make an offer, not a full price offer mind you but an offer. Of course I would be looking for a discount off that price but not as severe as most of the other properties out there.

I’ve been through apartment buildings that I thought were gold mines. Then I had estimates on the damages come in at close to a million. Be VERY realistic on the repairs needed, the repairs can be very high on large apartment buildings. Also you don’t want to own a property that is 30 miles from the nearest job. Jobs = rent money, No jobs = no rent money. You definitely have something to look at if the rent is $246,960 with a 60% occupancy, provided the repairs are reasonable, and the location is decent.

We can still give you a max purchase price if the rent is $246,960 when full. If the $246,960 is the actual rent amounts and the repairs are minimal, then I wouldn’t mind paying full asking.

I found this property on LOOPNET.There was proforma flyer with existing numbers and projected numbers.I think that$252.960 is gross rent with 100% ocupancy.Property is in Moore Oklahoma 10 minutes from south downtown Oklahoma City.Curent owner has this property over 1 year and had several poor management companies,That is why ocupancy is awful. There is nothing about defer maintanance.I just heard that if property has high vacancy or low rent it can be bought with discount.What is worth property with 40% vacancy?

Sorry guys,rental income is$252.960 not $246. 960

Buy based on CURRENT numbers. 60% of the estimated gross is $151,776 and you number should be based on that. The rent upside you get by curing occupancy is YOUR profit, don’t let anyone take that away from you. I wouldn’t pay more than $632,400 based on these numbers. Maybe if he seller financed the whole thing and you could get deferred payments you could pay a little more but I personally wouldn’t pay a dime more if I was putting money down and getting bank financing. Only if…ONLY IF…the terms were really good would I pay any more.

Rich ;; Please tell me how did you arrive with this price$632400.

Currently 60% occupied, 60% times the estimated gross of $252,960 = $151,776 real annual income. $151,776 / 12 = $12,648/monthly. $12,648 / 0.02 = $632,400.

Look at Propertymanager’s posts for info on his .02 rule.

Thank you Rich.I found in property flyer that property must be sold with existing financing in place,30years amn,at 6.6% fixed for 9 more years.Existing balance of approximately $1.005.000.So this is not good deal I think.

You’re not going to find many steals on Loopnet. You’ll find some but most straight retail. The current owner overpaid, mismanaged it and is now trying to pass it off to someone else. To find real deals you’re going to have to go out to your local investment club meetings and talk to people.

I was searching Loopnet to practice property evaluation.I bought Dave Lindahl course APARTMENT HOUSE RICHES with Multiunit Profit Finder software You put the numbers from proforma and it shows how property is performing.You are right about properties from Loopnet.It is hard to find good one.I was looking for properties from my local investment club and they have properties which are also overprice.I do not know how they arrived with asking price.I think they are profesionals and know real value property for example:
price$280.000 4unit
monthly rent $3200
Using 0.02 formula property is worth $160000
amI right?

Retail and what will cashflow using real world expenses are far different numbers, that’s why the numbers are not very close.