Need Guidance

Going to see a 6 unit building tomorrow..here are the specs:



GSI: 62200

NOI: 40209

CPR: 7.0

GRM: 10.0

TAE: 21991

i have $500K in cash on hand. Asking price for this building is $600K. This is in the Northwest suburbs of Chicago. Commking?

This would be my first deal in commercial RE, previously only dealt with flipping SF homes. Is this a good deal? What should i be looking for and asking my agent?





Comments(2)

  • roberth15th June, 2006

    I would be asking the following from the seller;

    2 yrs operating statements
    yr to date income and expense statement
    has the property been at >90% Occupancy for the last yr
    Debt coverage ratio above 1.25%
    three yrs maintenance records
    Does the rent include elect, water, gas, garbage, ect.
    Has there been an MAI appraisal
    Speak with a couple of the residents and ask what their opinion of the property is and the neighborhood.

    this should get you most of the important information and determine if it will be able to be financed.

    The lenders look for;
    No Fixers
    sufficient net worth of buyer
    6mo cash reserves
    decent credit score
    apartment management experience (2 Yrs)
    acceptable down payment from borrowers own pocket
    >90% occupancy for last yr

    If these items can be checked off then you stand a good chance of having a decent property that can be financed.

    Good Luck,
    Robert
    [addsig]

  • tassod16th June, 2006

    Thank you very much for the reply, i will certainly use this.

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