Posted by Ed Garcia on November 22, 2002 at 10:16:49:
Juan,
I’m afraid you haven’t given us enough information to tell us if we have a deal, or what is the best way for you to approach it.
Juan, although with what little information you have given and I should have no doubt to trust what has so far been shared. You have already identified yourself as a NEWBIE.
What would make you think that you would have enough experience as a Newbie, to fill and stabilize this building when a previous experienced investor has failed.
My point is for you to never think that you’re smarter then the previous owner. The biggest catch all for a failed deal, is Management. It is a catch all, and is not necessarily the reason for the problems of the building.
Here are 18 basic questions I ask myself in order to analyze or approach this type of deal.
I added 2 more to find out about you.
(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?
(20) Do you have any money to put down or for the rehab?
If you answer these questions, then I can answer yours, with a meaningful answer.
Otherwise, it’s just, What ifs? or hypothetical.
Ed Garcia