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Posted by Eddie on January 30, 2002 at 16:50:12:

Year built: 1966
# of buildings: 2- 2 story buildings (1= 24 units, 1= 16)

1.11 acres

32- 1 bedrooms @ 550 sf. 8- 2 bedrooms @ 700 sf.

Heat: Baseboard Hot Water

A/C: Thru Wall individual units

Domestic Hot Water: 80 Gallon Gas Fired hot water heaters in each building. The water heaters are approx. 8 years old.

Roof: Flat Rubber about 10 years old
Laundry: Community Laundry Facility in basement of each building.


(Thru Oct 1)

Rent:
Gross: 126,940
Vacancy: 21,318
Laundry: 1351
Total: 105,622

Expenses:
Admin: 3598
Payroll: 9255
Bad Debt: 1712
Electric/Gas: 23460
Water: 10878
Maintenance: 12106
Trash: 1685
Snow: 292
R.E. Taxes: 8071
Insurance: 80,379

NOI: 25243

NOI for for the next 2 months would make it a 30,000 for 2001.


Asking Price: 350,000
Supposedly theres 2 contracts to purchase on the property that are about to be presented to the owner. I told the listing agent basically that I am very interested and that both he and the owner should look at my offer before accepting the other offers.

Well, the expenses are beating this thing badly.


Comments?

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Posted by CAW on January 30, 2002 at 22:15:06:

I thought that insurance was a little high (smile)

It looks like roughly 25% of what the tenants pay in rent, they take back in included utilities. Power is going up, so that expense is going to get bigger soon.

I would see if there was any way to meter each unit individually and make tenants pay for their own utilities. If that is not possible, I would do a study to see what equivilent apartments are going for, with and without utilities. Your area sure seems cheap to live in. I would sure like to live in a place that all the utilities were included in the rent for $300 a month. That's a cheap place to live, for sure.

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Posted by Jacque - WA on January 30, 2002 at 20:47:04:

Hi Eddie,

This may be the wrong forum but I'll take a stab at it...

Let see here - if you take the figures of:

32 @ $330 and 8 @ $350 I come up with $160,320 for the gross rental income.

It seems that with the figures you provided you have a pretty high vacancy rate. Is this the norm for cap rates, vacancy rates, etc in your area? Is this typically what your experiencing.

It seems to me that the expense you listed, on an income of $160K, is a bit excessive. However, this could be due to several factors: the condition/age of the building(s), sheer amount of the utilities paid by the current owner(s), etc.

You also need to take into account the continuing and remaining Maintenance expenses - for example that rubber roof - after having to hot mop my apartment roofs I would suggest you consider taking that rubber roof into account for further expenditures as well as taking a look at the other factors that need/will need to be done.

However....can this be turned around? All of this depends on how you are planning on buying these units. Several thoughts enter my mind (here a few ideas):

1. The utilties situation.

2. Conversion to condo's and selling them of individually.

3. Raising rents...

Eddie, have you thought about offering to take this on as a lease? Once you have it cashflowing you can cash it out - or even flip it to another investor?

Just my thoughts,

Jacque

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Posted by Eddie on January 30, 2002 at 16:54:04:

38 out of the 40 units are presently rented.

The 1 bedrooms rent for 330. The 2 bedrooms rent for 350.

(Insurance= 8322 not 80322)

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Posted by Eddie on January 30, 2002 at 16:59:54:

nt