I have a complex i'm going after in Oklahoma City. The complex is a c plus to b minus complex.
The complex is 104 units with 48 units rented and renovated and 56 units needing to be renovated and leased out.
I'm working with a local property management company.
They have verified with me along with there sources in multi family that the apartment units that are rented are 150-200 dollars a month under rent. There is a complex directly across the street. That unit is the exactly the same and there 1 beds rent for 700, 2 beds for 800-850 and 3 beds 995. The complex we're buying has 1 beds for 400 and 2 beds for 450. Our complex also has studios that are renting for 350 but should be renting for 450.
So here's the numbers i'm using.
1.2 million dollar purchase plus rehab of 56 units at 4k a unit = $224,000 renovation
Across the street has a 98 percent occupancy year round and our current building has a 100 percent occupancy for units (48) that are rentable. Let's say 100 of the 104 units are rented
30- studios at 450 a month = 13,500
35 1 beds at 550 a month = 19,250
35 2 beds at 600 a month = 21,000
That gives us 53,750 gross income a month.
So at 53,750 gross income a month our expenses will be as follows (monthly)
1- property management 8% of gross income = 4,300
2- payroll, maintenance salaries= 5,500
3- taxes = 1,000
4- insurance, utilities, water= 9,000
5- material for repairs = 8,000
These are estimates from the owners expense sheets along with property managements estimates. So the expenses = 28,800 per month
53,750 gross income minus 28,800 per month = 24,950
I'm speaking with a lender who is considering lending 85% of the 1.2 million dollar purchase plus 224,000 renovation = 1,424,000
My payments would be 7,000 a month.
So 24,950 (income after all expenses) minus 7k loan payment = 17,950 a month Net operating income
I think there's plenty of room to make this deal work.
Please let me know if there's anyone out there who can do better than 85% at 50% occupancy and 7k per month on a 1,210,400 loan.