Posted by Ari Kumpis on September 17, 2009 at 23:43:01:
You will want to talk to the asset manager. Every bank has them, and if they tell you they don’t have one, ask again. Some banks may tell people they don’t have asset managers just so they don’t have to deal with them.
Outstanding Multi Family Project Analyze - Posted by Uwe Siegert
Posted by Uwe Siegert on July 24, 2009 at 16:08:05:
Hi,
I found an outstanding MF-Property , its a short sale, the LP is $875k, the property is well maintained und has 60 units (83% occupied). 5 Buildings each 12 units, mixed 24 two bed ($500), 36 one bed($460).
The actual loss and profit statement predicates the following:
gross income May 2008-May 2009: $327k, less expenses is the NOI $142k
I dont know, why is the property so cheap. The Broker says nothing.
For me an outstanding project. I am a smaller property manager, so I can rise the NOI once more.
What shall I do? Unfortunately, I dont have enough cash for a down payment in this price range, think 5% down is not advisable. Any suggestions?
Need more informations? Let me know.
Thanks
U.Siegert.
Re: Outstanding Multi Family Project Analyze - Posted by ray@lcorn
Posted by ray@lcorn on July 26, 2009 at 09:06:43:
Uwe,
The problem with the listing numbers is they are based on pro forma performance. When you do the math for gross potential rent compared to the listed gross income, the listed gross is about 95% of the gross potential rent. That reflects the common practice of brokers applying a standard 5% vacancy loss to the gross potential rent regardless of what the actual rent roll may be.
You noted the actual occupancy is 83%, which indicates an actual gross rent of about $284,458. Quite a difference, eh? And that’s if every tenant pays on time, which, as a property manager, you know is a rare occurrence. Collection losses typically reduce the actual revenue collected compared to gross rent due based on the actual rent roll.
The reported expenses will also have to be verified. Some brokers use actual past expenses, some use rule-of-thumb percentages, and some just deduct taxes and insurance. My guess on this one is there is some basis in fact because the expense percentage of the pro forma gross revenue is more than the rule-of-thumb 45%.
This is why no valuation can be determined without the real operating numbers. There is a reason this deal is priced at such an attractive per unit cost, and the reason will be found only when you have the full story about the current operations, the amount of deferred maintenance, and the market position of the property in relation to its competitive set. Only when those basic facts are known can you determine whether this is truly an opportunity or a non-starter at any price.
ray
Re: Outstanding Multi Family Project Analyze - Posted by Ari
Posted by Ari on July 25, 2009 at 13:37:19:
Well, if this is a listing on the MLS then the listing price is usually wrong. I’ve found that when agents and brokers list short sales on the MLS, the listing price is just a made up price. No one knows what the bank will accept, but they have to put some kind of price up. Maybe this is the reason the price is low. Remember that you will get better deals on short sales if you go directly to the bank, not through the agent/broker.
Re: Outstanding Multi Family Project Analyze - Posted by Uwe Siegert
Posted by Uwe Siegert on August 31, 2009 at 09:53:00:
Hello Ray,
Thank you for your advice. But you misunderstand me the P&L is actual, not proforma. I have new informations about this propertie. The occupancy is today 92%, the NOI is now $153k, thats a percentage of 43% of the possible Gross. For this price OUTSTANDING.
-Uwe
Re: Outstanding Multi Family Project Analyze - Posted by James
Posted by James on September 17, 2009 at 23:36:28:
Ari, how would I go about finding direct contacts at banks selling MF properties ?
Re: Outstanding Multi Family Project Analyze - Posted by Uwe Siegert
Posted by Uwe Siegert on August 31, 2009 at 10:47:14:
Hello Ari,
This is not on MLS, a have a bank contact for this. But need the broker for statements.
-Uwe