Posted by Ed Garcia on July 06, 2001 at 03:24:10:
Since you haven’t given us much information abut this acquisition, and based on your Gross Rents, I don’t agree with the value that your suggesting. At an 11 Cap I figure the property is worth $654,545. Even in New York, a 9 Cap would make it worth $800,000.
Louis, I see no reason to lose any sleep over this deal. You say that there is a lot of room to raise rents, but then again don’t give us any numbers.
When I work a deal like this, here are some ballpark questions I ask just to get a feel if I have a deal, and how to start to work it.
Questions to ask for commercial
(1) Describe The Units and the surrounding area?
(2) How old are the units?
(3) What’s the unit mix ( how many 1 br. 2 br etc)
(4) What’s the vacancy factor in the area?
(5) What is the gross income of the units?
(6) What is the vacancy of the units?
(7) What is the NOI?
(8) What are market rents in the area?
(9) Are there any other Units in the area for sale?
(10) If so at what Price?
(11) What are the going Cap rates in the area on multiple units?
(12) Have any other Units in the area recently sold?
(13) If so at what price?
(14) How much does the seller owe on the units?
(15) If there is a loan, is it assumable?
(16) Will the seller carry a second?
(17) Is there any differed maintenance?
(18) If so, estimated cost of maintenance?
(19) How’s your credit?