Unlike Australia where you may get a maximum of 40 units on a block when you have a unit site, in America they have .. big unit sites. How big?
Good gracious .. how does 384 units sound?
Yes .. someone is offering a block of THREE HUNDRED AND EIGHTY FOUR UNITS for a mere 5 million US bucks.
On .. Ebay no less.
I'm sure there is a hefty maintainence bill in there somewhere.
Imagine 100% occupancy at x dollars a week = 384 times (x*52) = oh wow a lot of cash.
The bills on that thing would probably scare Bill Gates.
At 35% occupancy and $100 pw per unit
= 0.35 * 52 * 384 * 100 = 698880So divide by 5M. Gives a return of 13.97% Pays for itself!! and only 531 people have viewed the oppurtunity…..
Does kind of beg the question – why did the occupancy really drop from 85% to 35% in one year…surely there is another facor in play than the stated —owner is nearing retirement.
"85% occuppied last year. Only 35% now due to time constraints on management (retiring).
Near Beltway 8. Renovations done. Partner who runs the building now is retiring"
Is it a case of no-one wants to live there, unless the owner hounds tenants, and gives them such a good deal – why in another year with this sort of management the place would be empty….
_If you could fill it then you would get your money back very quickly !!
There are hundreds of these properties for sale and it is an art selecting the right one to buy, if you have the ready cash. Without getting into all the details, you look for property of this type with the right things wrong with it, not just occupancy rate.
You need to have a motivated vendor of the type mentioned above, retiring and mismanaging. It has to be in a rentable corridor, it needs to have maintenance costs that can be lowered, it needs fixed costs easily transferred to tenants (eg elect usage) etc and these all need to be easily procured within a short time frame. There are a number of other areas that need be assessed as well.
If you can lower your overheads AND then increase rents by $5-$10pw x 100/200/300 units, then your NOI changes in your favour dramatically and quickly, putting less pressure on occupancy rate. It also increases the commericial value immediately as well.
Ian
http://theblockblog.com
Free Property Information, Tools & Resources for Property Investors (with a sense of humour!)
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