When is it ever ok to buy a negative cashflow large multifamily unit of ex. 200-300+ units? What would be the cause of a large multifamily property to cash flow negatively? I know every situation is different but are there any common thing that a new owner can do to turn around a property that is 50 or 51% occupied? Thanks for all input
it could be crappy management
Expensive management... had a case where the opex was 94%. No wonder it was in foreclosure and and sole at a huge discount.
[ Edited by cjmazur on Date 11/20/2008 ]
But would you ever purchase a multifamily property with negative cashflow if you knew the management was bad and knew that your management team could perform extremely better?
Because someone else terribly managed a property and it goes into foreclosure, then sold for a great discount. To me someone with good management could stand to make a hell of a lot of money with a reposition. I've read on this message board never to buy negative cash flow property but to me I see opportunity. Any comments?
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Yes.
In this case they got the note for like 40/100. So w/ that buffer, and a high occupancy, I saw this as a turnaround property.
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