Walter 0 Report post Posted November 4, 2004 Over three weeks ago I run into an old investor from out of town. He wants to sell his property where I live. Today I got his offer: -Apartment building with 14x1 bdrms $500-525) and 7x bachelors ($425). If fully rented it brings around 120k gross.-Selling price $ 495k Canadian dollars-$35k deposit towards selling price-12 month lease period to arrange a new fiancing with no less than 75% of purchase price-upon getting a new mortgage, seller will hold the balance on second mortgage for 1 year at +2% of 1st mortgage -1st and last lease payment required upfront ($4,600)-property sold as is with no warranties-monthly lease - $2,300-monthly tax - $1,400 -monthly insurance - $180 -monthly bills for:-gas - $1,250-hydro - $916-water - $391 Current vacancy - 23.8% (5 apartments empty)Sweat involved to improve the property (cleaning, minor fix ups, painting)4 apartments can be ready for rent within 2 weeks with minor expenses (clean, paint). What's your take on this monster? Walter Share this post Link to post Share on other sites
MichaelC 160 Report post Posted November 4, 2004 Walter, it's impossible to answer your question about this property without a heck of a lot more information.For example, the owner is asking $495K. Is this the steal of a lifetime, or is he over market? Can the rents be improved with some cleanup? What are the monthly expenses involved with this property? Are you up to the very hands on task of running this complex? Maintenance, rent collection, evictions, vacancies, carrying costs, etc. A 21 unit building can be a pretty daunting task for a new landlord. Share this post Link to post Share on other sites
Walter 0 Report post Posted November 5, 2004 Walter, it's impossible to answer your question about this property without a heck of a lot more information.For example, the owner is asking $495K. Is this the steal of a lifetime, or is he over market? Can the rents be improved with some cleanup? What are the monthly expenses involved with this property? Are you up to the very hands on task of running this complex? Maintenance, rent collection, evictions, vacancies, carrying costs, etc. A 21 unit building can be a pretty daunting task for a new landlord.<{POST_SNAPBACK}> Yes it is rather a difficult task to dump the whole case on this forum. From speaking with few tradesmen I found out more details and it looks like the price is too high, however they admited that the property has a good potential. I may not have enough financial strenght after the purchase if something goes against me. Here I am talking about the unforeseen things since we don't know the future.As I mentioned the property has been run down...that would suggest nothing else but a good potential to increase the rents. On the other hand I am not sure how many people on this board actually deal with multi residential properties, so I may have to turn elsewhere for this answer. Thanks, Walter Share this post Link to post Share on other sites
MichaelC 160 Report post Posted November 5, 2004 Walter, every property has potential, if you purchase with the right terms at the right price. In the interest of saving yourself a lot of time, focus on the motivation of the present owner and his willingness to do anything creative.You already noted his asking price is high. Has he indicated any softening of the asking price? If not, is he offering unbeatable terms to compensate for the inflated price? If the answer to both these questions is no, file it away for a few months and try again then. If, after this time, you are still interested in a 21 unit property, see if the passing of time has increased the owner's motivation. Share this post Link to post Share on other sites
