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