Other Deal and Complex

I have decided to pass on the lease/purchase deal my other broker sent me. The numbers would be a bit slim each month, and the final profit wouldn't be all that grand after 4 years - and that's IF the tenants decide to buy it at the end of 4 years. Plus, I was talking with another investor friend of mine about it and he shed some light on other things I hadn't considered in the deal, which further led to my decision. So, it looks like that deal will be a bust. Perhaps it's a good thing as I need to get things lined-up for House #2, and start deciding what I'll do with House #1.

I've played email tag with the broker who is listing the apartment complex I came across. He said he is going to put together a package for me with as much information as he knows. In the interim, this is what he told me:

1. The $98,000/yr potential income listed is for full occupancy.

2. There is another smaller apartment complex right across the street that is almost at full capacity. He said rentals - especially apartments - are in demand in the area moreso than SFR's (rentals or ownership).

3. The owner had it for sale originally for $190,000, but dropped it down to $80,000 recently. The broker said the owner is NOT - in no way - willing to drop it further or do any seller financing. I asked if it was a bank or government who owned it, but he hasn't said yet.

4. The broker estimated repairs at $13-15k per unit, although, he stressed it was just his estimate and not from any bids done. The reason being is that the place has been vandalized due to it sitting completely empty for so long. So, $80,000 purchase + $15,000 x 21 units = ~$400,000. That definately changes things a bit. He did say the structure and roof were in good condition, though - it's mainly damage to the inside of the units (grafity, busted lights, holes in walls).

4. The manager in the apartment complex across the street has expressed interest in maanging this complex once it's up-n-running.

5. Local rents range from $350-$600. I did some research online, and $450 would be average for the size of units in that area - $395/$400 may fill the place up quicker. So ...

Occupancy	Gross Income
25% (5 units)	$2,000/mo.
50% (10 units)	$4,000/mo.
75% (15 units)	$6,000/mo.
100% (20 units)	$8,000/mo.

So, many things to think about. I was thinking of first determining the ARV of the place. One broker I talked to about it said I could put 15-20% down and get a loan for the rest, including construction costs (paid out in stages, of course). I could then hire a GC to work on 5 or so units at a times, and once completed, rent them out. Then do 5 more, and so on, until the whole place is completed. Of course, this is all generalization as there are a multitude of things to consider along the way.