I currently own 4 SFH and one 3 unit rent house. This would be my first trip into comm. RE. Trying not to screw up royally and so I call on you to pick this idea apart. Ask or tell me things I had not thought of.
24 unit complex(6 quads)
each unit is 2 story 2BR/1bath
each unit has W/D connections and central AC/heat
Each unit is individually metered
I believe it is a solid "C" property
I visited the property in Sept 07 and saw 2 units.
They were clean and didn't seem to have any structural problems.
On site manager occupies 1 unit
The have a full time maint. man that lives off site- he told me this was because the tenants didn't like him being there 24/7. He said he treated the place like it was his own.
I did see a several damaged window screens and a couple of cracked window panes.
I was told most of the tenants were Hispanic families. From the looks of a couple of families, possibly illegal immigrants. All of them seemed to be employed, only 1 or 2 units occupied during the workday. The manager is bilingual and was pleasant.
The buildings looked OK. Could use some brighter colors.
The black top drive needed repair. They had a serious erosion problem in some areas(no grass-bare sand)
I saw no other amenities.
Located in the middle of a small city, approx. 25K pop. Also near the DFW metroplex.
Not in a bad(violent) neighborhood. Not located in the choice neighborhood.
We are in the middle of a huge gas drilling find(Barnett Shale) and rental units are scarce for the workers moving here. This is supposed to last another 5+ years.
Numbers:
Asking price $628K. (26,167 per door)
Been on market for about a year now. Asking price has gone down about 100K over that time. Owners are based in California and may be hurting.
Most units are listed as renting for $425/ month
Annual Prop taxes are listed as $7000(583.33/month)
My annual insurance projections are based on 1% of purchase price(past experience) or 6280. I moved that up to 6500.(541.67/month)
I was also allowing $500/month maint. cost based on a wild guess.
I would be able to put $80k into the deal and financing the bal for 30 years. At 8% interest it works out to $4072.39/month payments.
So 425 x 23 units(manager living in one)=9775 gross rents x 90%(10% rent loss) = 8797.50 net rents/ month
Expenses 583.33 + 541.67 + 4072.39 + 500 = 5697.39/ month
8797.50-5697.39 = 3100.11 net after PITA
That calculated to 46.5% cash on cash return.
Still not good with cap rate yet. They don't list one with the advertisement but form what I've read it doesn't mean anything anyway.
I want to be able to gain from this property in both cash flow and value. I would see selling it in 5 years when the shale play has ended.
What bases do I need to cover before I put a bid in and stir this pot? I intend to hire an inspector to go over every nook and cranny when the time comes.
Any suggestions? Thanks:cheers:
Greg
24 unit complex(6 quads)
each unit is 2 story 2BR/1bath
each unit has W/D connections and central AC/heat
Each unit is individually metered
I believe it is a solid "C" property
I visited the property in Sept 07 and saw 2 units.
They were clean and didn't seem to have any structural problems.
On site manager occupies 1 unit
The have a full time maint. man that lives off site- he told me this was because the tenants didn't like him being there 24/7. He said he treated the place like it was his own.
I did see a several damaged window screens and a couple of cracked window panes.
I was told most of the tenants were Hispanic families. From the looks of a couple of families, possibly illegal immigrants. All of them seemed to be employed, only 1 or 2 units occupied during the workday. The manager is bilingual and was pleasant.
The buildings looked OK. Could use some brighter colors.
The black top drive needed repair. They had a serious erosion problem in some areas(no grass-bare sand)
I saw no other amenities.
Located in the middle of a small city, approx. 25K pop. Also near the DFW metroplex.
Not in a bad(violent) neighborhood. Not located in the choice neighborhood.
We are in the middle of a huge gas drilling find(Barnett Shale) and rental units are scarce for the workers moving here. This is supposed to last another 5+ years.
Numbers:
Asking price $628K. (26,167 per door)
Been on market for about a year now. Asking price has gone down about 100K over that time. Owners are based in California and may be hurting.
Most units are listed as renting for $425/ month
Annual Prop taxes are listed as $7000(583.33/month)
My annual insurance projections are based on 1% of purchase price(past experience) or 6280. I moved that up to 6500.(541.67/month)
I was also allowing $500/month maint. cost based on a wild guess.
I would be able to put $80k into the deal and financing the bal for 30 years. At 8% interest it works out to $4072.39/month payments.
So 425 x 23 units(manager living in one)=9775 gross rents x 90%(10% rent loss) = 8797.50 net rents/ month
Expenses 583.33 + 541.67 + 4072.39 + 500 = 5697.39/ month
8797.50-5697.39 = 3100.11 net after PITA
That calculated to 46.5% cash on cash return.
Still not good with cap rate yet. They don't list one with the advertisement but form what I've read it doesn't mean anything anyway.
I want to be able to gain from this property in both cash flow and value. I would see selling it in 5 years when the shale play has ended.
What bases do I need to cover before I put a bid in and stir this pot? I intend to hire an inspector to go over every nook and cranny when the time comes.
Any suggestions? Thanks:cheers:
Greg
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