Is this a deal worth pursuing? - Posted by Steve

Posted by Eric_SF on May 27, 2005 at 20:40:06:

A few things:

There is a massive disparity between the current rent and what you believe is the market rent. On the 2s, you want to increase the rent > 100%? Even if you could, you probably have to renovate it, so what’s your cost estimate for that? And what about the inherent vacancy when your tenants move out?

Even with 35% down, I just don’t see how you’re going to get a 30 year am loan with a 5% interest rate. SFRs have lower risk, and you’ll be lucky to get a 30 year on those for 5.75% these days with no points.

Based on the limited data you provided, you really want to make this deal work.

Is this a deal worth pursuing? - Posted by Steve

Posted by Steve on May 26, 2005 at 21:41:01:

Hello. I found this deal. I gave different scenarios for you to look at. Here are the facts:

price: $1,925,000
down pmt: 35% ($673,750)
units: 18 2(2/1), 10 (1/1), 6(studios)
cap 5.4%
built: 1916

proposed loan: 5%, 1,251,250, 30yr
dcr: 1.299
worst case loan: 8%, 1,251,250, 30yr
worst case dcr: 0.950

units are below market.

current rent: 2(2/1)=$690, 10(1/1)=$787, 6(stud)=$642
mkt rent: 2(2/1)=$1400, 10(1/1)=$1100, 6(stud)=$900

current sgi: $160,824.00
potential sgi: $230,400.00

Do you see potential in this deal? Please advise.