I was confronted with this deal?

Question

An investor I know asked me if I wanted to partner up with her and buy into these 60 unit apartment buildings in texas, it costs 60k a unit. What things should I look for to find if this is a good deal? She says there's 43k monthly income and they are built near to Colleges one university and a comm college. Good buy in or no? What details should I look at?

Answer 1

go with it
my mom recently started an apartment thing in
another country
but its working really well
go for it
youll make alot

good luck=]

Answer 2

Bostonianimo is quite correct. This is a business investment, and you need to ask to 'see the books' from the current owners relative to incoming revenues as well as outflows. Is this $43K monthly income based upon a twelve month average, or does it only apply for the nine months of the school year ? How high are the maintenance expenses, given that you're probably looking at college dorm type tenants? Perform the due diligence and then determine whether or not this is a sound investment.

Answer 3

You need to perform due diligence. With multi family properties, you typically would look at the financials (income and expenses) for the last 2 years. Also, rent roll, current vacancy, market vacancy, market rent, etc.

This is in addition to physical, termite, environmental inspections.

Also, check zoning with the city (get zoning letter) and site survey.

As you can see, there is a lot of information you need to review in order to see if this is a good deal or not.

The 43K in income? Is the based on current financials or is it pro forma? Is that Net Operating Income after all debt services?

If I were you, I would really talk to this investor to find out all of the details. What do you know about the neighborhood? what is the condition of the units? who pays for the utilities?

You should really consult a COMMERCIAL real estate attorney if you decide to proceed. Commercial Real Estate is a different animal.

I have seen many people get burned in Commercial RE thinking that you just buy and collect rent..

Good Luck.

Answer 4

Look at the last couple years taxes of bring in...
Could possibly rent be raised after a new owner takes over.
What range income does ten tents
now living in units bring in.

Sounds ok...

Sounds like the monthly income should be higher than 43k..

Answer 5

You need to do a full business analysis of the deal including a physical inspection of the properties first. Anything less than full due diligence is just plain stupid from a business standpoint. You might as well just toss your money in the toilet.

Ignore the clueless rubes who just say "Go for it!" They have no more knowledge of what is going on that you do right now.

Answer 6

DO IT! Texas real estate is going through the roof!

You can never go wrong with property close to a college.
I do background checks for many apartment units close to colleges and malls in Houston. Looking to see if they are convicted felons, skipped out on other apts etc...
Anyway.. do it, you will be very happy.

Answer 7

Let me know where they are and I'll do some research for you since I'm in Texas. Depending on which college and location they are near can let me know whether you can make any potential profit from your investment.

Answer 8

Be careful!
A partnership is one kind of ship that does not float!

Unless you have mega cash to pay for the investment, I would not buy apartments in a college town. Too much risk!

The best kind of real estate investment is paid for real estate

Answer 9

I would consult a real estate lawyer 1st. Dont wanna get burned!