Posted by Judah hard money Hoover on August 08, 2011 at 12:16:22:
Ed Garcia would be proud. Where?s the beef?
I also happen to love your subtle last line.
Investor Allert: 60 Unit Apartment in S.W. Atlanta - Posted by Lion Atlanta
Posted by Lion Atlanta on July 22, 2011 at 12:29:25:
Hello,
I negotiated the sale of a 60 Unit Apartment Complex in S.W. Atlanta (Fulton County Beltline TAD/Ft. McPherson) for $500K. I am looking for investment dollars that can handle a 20% downpayment ($100K) on a $500K loan in exchange for above market returns.
The seller is no longer able to manage the complex and just wants out. My partner and I are happy to help her, we just need an initial cash outlay for downpayment on a conventional 30 year fixed loan for $500K.
Units are all identical with a 1 bdr townhouse style. Kitchen and living room are down stairs and the bedroom and bathroom are up stairs.
I can send more detailed info including rent rolls to serious inquires.
Expenses
Insurance: $21,600
Water: $36,000
Taxes: $36,000
Utilities: $12,000 (water and a fractional electrical cost)
Maint.: $26,000(I will be managing the property)
Total: $132,000
Rent $425 per @ 50% occupancy
Rental income: $153,000
NOI: $23,000
I would like to build up the value of these units over the next few years, sell for a handsome profit, then move on to the next project.
I would classify these properties as C or even D.
Rents are at their upper limits, and expenses are in check.
Thank you,
Lion Atlanta
shaw.lion@gmail.com
Re: Investor Allert: 60 Unit Apartment in - Posted by Mr. V
Posted by Mr. V on August 29, 2011 at 24:39:17:
Is it just me or are those expense figures a little bit over inflated? I would say even double than what it should be.
Re: Investor Beware: - Posted by ray@lcorn
Posted by ray@lcorn on July 30, 2011 at 09:04:21:
IMO you’ll need much more than the $100T.
You don’t say where the 80% LTC loan is coming from, but no bank is going to make that loan without additional collateral or a very strong financial statement.
Then there is the problem of where “above market returns” are coming from. Unless the loan is structured to defer debt service completely for at least six months to a year you’re looking at negative cash flow from the get go. You’ll need reserves to cover that until lease-up brings it to break-even performance.
Further, no complex with 50% vacancy is without deferred maintenance. A bare minimum of $1,000 per unit is a $60T CapEx budget. If there are significant repairs and refurbishment it could take $3,000 per unit.
Maybe you’ve got all this covered in your package of additional details. If so, disregard. Otherwise, think it all the way through.
ray
Re: Investor Allert: 60 Unit Apartment in - Posted by ray@lcorn
Posted by ray@lcorn on August 29, 2011 at 08:48:56:
I agree, but I think these are pro forma numbers with a lot of erroneous assumptions.
Taxes and insurance are fixed expenses, but these are more than triple normal levels. Average property taxes in most areas range 1%-1.25% of assessed value. Insurance premiums are rarely more than .1% of building value (ex land).
Among the variable expenses there is a double charge for water. Maintenance seems to include management as well.
However, there are some expenses missing too. No expense for advertising to fill 30 vacant units, no improvement allowance and no collection loss.
Lots of work to do to get the real picture on any deal, and this is a good example of what we often have to start with.
ray