Great Deal Alert
At a time when it is so difficult to find a viable property that is not a headache or a money pit and also cash flows, this one stands out among the rest for a number of reasons. I was high on it several months ago and actually had it in escrow. But it was at $2.3mm at the time and it simply did not ‘pencil’ at that price. But I have stayed in touch with the broker and he has let me know the seller is now much more motivated. It is still showing on the MLS at $2.3 but he told me to go ahead and send an offer for $2mm and he thought he could pull that off. Just for safety sake I am underwriting it at $2.1mm (it certainly could get to $2mm though,) and even at that price it will yield a 10% cash on cash return. Aside from that, here are the attributes that set it apart from pretty much anything else I am seeing out there:
a) it has been thoroughly renovated from top to bottom and very nicely at that. Any new owner should not be looking forward to high maintenance/repair costs. It also is on the RUBS program so tenants are paying their own utilities.
b) It is almost all studios and the units are rented at a price point that means they should be able to be kept fully occupied almost all the time. All right around $1500-ish. At this moment there are two vacancies that will be rapidly filled. When they are filled – whether by you or by the current owners – the income will be $18,800/mo. At that income one will have a $4500/mo cash flow , or $54,000 annual income. You only need to bring in cash out of pocket around $545,000, and that includes closing costs. Thus, 10% cash on cash return.
c) It is one of the few multi-family buildings out there that actually has room to add a bunch of ADUs. AB (Assembly Bill) 1211 allows one to add 8 ADUs there, and it is actually feasible to do that. This would hugely increase one’s cash on cash return.
d) It is a reasonably good location. It is a location where fairly upscale entry level type tenants will be happy to live while they are on their way up in life. These are not Section 8 or government subsidized tenants. They are working people who are mostly upwardly mobile. Makes for a more stable environment for an owner/landlord.
OK, there you go. Anyone who is interested in purchasing this or thinks they might be, give me a call and I will help you get it.
