82 Units , please advice! upside potential - Posted by Nancy

Real Estate Investing Self Storages
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Posted by Nancy on July 06, 2006 at 13:36:05:

The seller is not willing to carry any note, he wants the money and get out. I got to verify the occupancy, if it is really around 62%, then our negative cash flow will not be too bad, otherwise we’ll have to discount it further.

I’m just very uncertain of how long it’ll take to bring the property up and how much it’ll cost… I got a few experienced investors interested in the deal, I’ll see what they’ll say.

What do you think is a resonable assignment fee or a share of ownership for a deal with this kind of upside and risk? if I’m not vesting any money and not involved in the management?

thanks
Nancy

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82 Units , please advice! upside potential - Posted by Nancy

Posted by Nancy on July 06, 2006 at 10:31:59:

Hi every one,
I’m working on a deal in Dallas Fort Worth area, Texas, need some advice and partners.
A 80+ complex in a good location. C type property in B+ neighborhood

? Brick exterior
? Flat roof
? 2 story garden style, 5 buildings
? Pool
? Individual HVAC
? 4 units share 1 water heater, run on electric
? Sub-metered, tenant pay utilities
? 1972 per tax roll
? In nice SFH residential area, quiet, at edge of a golf course
? Across street is a well kept town home for rent
? No other apartments in the immediate area
NO MAJOR REPAIRS, ONLY COSMETICS NEEDED

Unit mix and actual rent
1/1 40 units, rent $425/month
2/1 24 units, 475/month
2/2 8 units, 500 / month
3/1 10 units, 525/ month

Currently 62% occuppied, per owner, selling at around 17K per unit
There’s no income and expense report provided with the sale due to possible lawsuit with owner and privious management company. so I estimated expenses around 45% of Gross Income.

Asking 1.47M from the seller. (price may be renegotiated during inspection)

At 90% occupancy,
ROI is 406620 (not including other income from laundary or late fees)
Operating expenses: 172000
NOI: 234888

Cap rate is 16%

Debt service is 91,000
cashflow before tax 142,921

the value of the apartment at 10% cap is 2.35 M
the value of the apartmentat 9% cap rate 2.6 M

The apartment is currently 62% occupied. Based on my calculation, the break even point is 65% assuming taking over the existing mortage
Note Info:

Loan balance is $1.15M, Assumable with 1% assumption cost, PITI payment is 13,000/month

I have local banks who have funded apartment deals in the past with out Income and expense report

The current lender of the loan is also local, they seems to be quite flexible… might be able to work out a payment plan while filling up the apartment.

I can send more information and pictures. Looking for seasoned investor to get in it together. Total investment will be around $285,000 assuming the mortgage. or new loan can also be obtained. This countract can not be assigned… so I 'll need to remain as one of the partners.

what’s the best way to fund this deal …and how to project the time required to fill up the vacancies. Local market in DFW is not bad.

Any advice please? I need to send back a counter by Monday.

Please let me know if any one is interested in the deal. I’m open to either one investor taking the whole deal or several chiping in. (only seasoned investors please)

Thanks for your help!

Nancy

214-206-1859
EliteRES@gmail.com

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Re: 82 Units , please advice! upside potential - Posted by Pete

Posted by Pete on July 08, 2006 at 16:34:52:

This is what I look for with self storage here’s what I seen missing

  1. current cash flow based on possible loan packages ie 90%ltv vs 75% ltv etc

  2. what are the receivables

  3. why in your assessment isn’t this filling up, it’s easy to say mismanagement to sell it. Can you find reasons?

  4. how do you know no major repairs are needed

  5. could this be a condo conversion?

This sounds good on the surface to me

Pete

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Re: 82 Units , please advice! upside potential - Posted by Patrick S. Lawson

Posted by Patrick S. Lawson on July 06, 2006 at 10:52:04:

On the surface the deal looks good. On important piece of information you left out was what are you bringing into the deal? Any investor/lender is going to be reticent to come into this deal if you are not vested.

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Re: 82 Units , please advice! upside potential - Posted by Nancy

Posted by Nancy on July 06, 2006 at 11:54:17:

Patrick,
Thanks for the reply.
I found the deal, I can do any of the following

  1. take an assignment fee
  2. Take a percentage ownership (silent partner) in the property, instead of getting the assignement fee.
  3. pull a group of investors together and vest in the deal myself.

I’m flexible… depends on who I come aross first and get the deal done.

thanks
Nancy

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Re: 82 Units , please advice! upside potential - Posted by Patrick S. Lawson

Posted by Patrick S. Lawson on July 06, 2006 at 12:53:25:

If you can get the seller to carry 20% you can get into the property with 5% down. Or, you can get up to 90% LTV w/o a seller carry back. In both cases it looks as though the property would cash flow enough to satisfy the lender.