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Buying A Large Apt Complex
Posted on 2/12/20 at 8:17 am
Posted on 2/12/20 at 8:17 am
So I’ve been looking into this recently and haven’t dived into this realm yet. For argument’s sake, let’s say it’s a 30 unit complex worth 1.6 million and you have a good relationship with a bank currently owning some single family properties. Obviously this is a different world of REI, so I wanted to see what are some of the bigger issues to have in order. I have a good RE tax guy that has helped along the way but was curious of further guidance. Thanks for any responses to the best board on TD
Posted on 2/12/20 at 10:43 am to MrJimBeam
18 units in Montrose, Houston, Tx.
You want finance, development, headaches, or what other kind of guidance.
You want finance, development, headaches, or what other kind of guidance.
Posted on 2/12/20 at 11:24 am to MrJimBeam
quote:
Large Apt Complex
quote:
30 unit complex worth 1.6 million
With that out of the way, you plan on being the manager?
Posted on 2/12/20 at 4:10 pm to MrJimBeam
I'm guessing they are pretty old for being $60,000 each?
Are you going to have someone on site? Is there an office? If not, I'd probably make it 29 units with an office.
I don't have any experience with it, but I'd make sure the money is right unless this is a retirement gig for you.
ETA: The issue with apt complexes is a lot of them are built in up and coming areas that then come and go. No one wants to live there anymore in the units built in the 90s and early 2000s. So you are chasing the bottom and getting crappy tenants. Now if you can buy one built many years ago in a good location that is likely to improve, absolutely.
I'd also consider the long term land play. $1.8 for a chunk of land that fits 30 single floor units could be worth a lot one day or even now or very soon.
Are you going to have someone on site? Is there an office? If not, I'd probably make it 29 units with an office.
I don't have any experience with it, but I'd make sure the money is right unless this is a retirement gig for you.
ETA: The issue with apt complexes is a lot of them are built in up and coming areas that then come and go. No one wants to live there anymore in the units built in the 90s and early 2000s. So you are chasing the bottom and getting crappy tenants. Now if you can buy one built many years ago in a good location that is likely to improve, absolutely.
I'd also consider the long term land play. $1.8 for a chunk of land that fits 30 single floor units could be worth a lot one day or even now or very soon.
This post was edited on 2/12/20 at 4:13 pm
Posted on 2/12/20 at 4:15 pm to MrJimBeam
I finance large apartment complex’s and they are looked at differently but terms are very attractive.
I am a commercial banker and work for a larger bank that loves these deals. They work pretty well.
I am a commercial banker and work for a larger bank that loves these deals. They work pretty well.
Posted on 2/12/20 at 6:52 pm to soupboy10
quote:
I finance large apartment complex’s and they are looked at differently but terms are very attractive.
I am a commercial banker and work for a larger bank that loves these deals. They work pretty well.
What terms are typical for someone with a small portfolio with prior experience? For example, what would the terms be like on this deal? 80% LTV? Interest only at first? How long would the note be?
Posted on 2/12/20 at 7:19 pm to nugget
Aren’t they typically 10 year 75%LTV?
Posted on 2/12/20 at 8:24 pm to nugget
quote:
What terms are typical for someone with a small portfolio with prior experience? For example, what would the terms be like on this deal? 80% LTV? Interest only at first? How long would the note be?
Nugget - we require 25% down and typically a 10 year term with a 20 or 25 year amortization. Prior experience is nice but not necessarily required.
Posted on 2/13/20 at 6:37 am to jimbeam
quote:
Aren’t they typically 10 year 75%LTV?
Apparently. But I could go to a local bank and get 85 on a 10/20 for something like what the OP suggested. Any bigger than that and I’m sure they would tell me to kick rocks.
Posted on 2/13/20 at 6:51 am to nugget
Nugget, what’s your contact info?
I have a few questions for you.
I have a few questions for you.
Posted on 2/13/20 at 8:37 am to MrJimBeam
quote:
I wanted to see what are some of the bigger issues to have in order.
I don’t know what sort of mix you’re looking at (1, 2 and/or 3 bedroom), but your appraisal contingency will help you there.
Also, taking the age of the building(s) into account, take a close look at the maintenance records and any capital improvements that have been made.
Depending on how the numbers play out, this could be THE deal that takes you to a different place. Good luck.
Posted on 2/13/20 at 8:37 am to jimbeam
I got a 80% LTV, 5-yr term 20-yr amortization on a small 9-unit in BR. The process was pretty damn easy to be honest.
You DO NOT need onsite management for 30 units.
You DO NOT need onsite management for 30 units.
Posted on 2/13/20 at 11:06 am to MrJimBeam
30 units isnt a large complex by any means. But either way as real estate investor I would not recommend taking on something of that size until you have some extensive experience and connections under your belt... i'd say atleast experience owning/managing a quadplex and some rehabs. I also think this would be better asked on biggerpockets
This post was edited on 2/13/20 at 12:27 pm
Posted on 2/14/20 at 10:54 am to MrJimBeam
I'm not sure how large Fat Bastard has gone with his real estate purchases, but I figure that he'd be a good one to chime in here. He always has some good input on real estate matters.
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