Off Market deal · Commercial Real Estate 101

Off Market deal

Driving to have dinner with family, I came across a vacant apartment complex. I stopped by there the next day to take a look. A police officer stopped by to ensure I wasn't vandalizing the place. Told him I might be interested in buying the place - and then he opened up. Gave me a lot of good details.

major issue - 90% of the complex is in a classified flood zone.
It's been vacant since it flooded about 2.5 years ago - I think it was hurricane Ida
they tore out the bottom 4 feet of sheetrock for mold remediation. There is still some mold issues there. All units are blocked off - no doors.
there are 44 - two bedroom one bath units about approximately 700 sqft
11 buildings - roof is pitched and in good condition
started installing hvac but not completed
11 two story buildings
Original purchase price is $2.2 Million - mortgage is current. Taxes are current.
Current median Market rents are about $2000+ per month
Each unit would need to be totally renovated - the lower units needing more TLC
Complex had problem tenants at that time
Area is up and coming as rents are increasing over the years and population is increasing

My thoughts since I don't know how to run the numbers prior to contacting the owners (LLC owned and run by 2 partners of that LLC): Living space will need to be above the flood line. The water went into the first floors of the units at the lower end of the property. The higher end of the property is up by the road and is not in the flood zone. The units at the upper end of the property did not get water inside the units, but did get into the crawl space beneath those units. The boiler was damaged in the flood. There was one large boiler for the entire complex - or so it would appear. (My thoughts - use the first floor for storage only and raise the buildings by one floor to keep the 44 unit count. Added income from the storage spaces. Size and number would be determined. I don't know how much it would cost to raise each building with a roof. We would make it a higher status complex as to the lower status complex it used to be. Not high end, but in the middle where we could generate about $2400/mo in rents per unit. We have space to add extra parking and rent those spots to outside parties for additional income. One note - there is a sewer line at the very end of the lower part of the property. During the flood, the cap came off of the manhole. In other words, the water flows past the property via the sewer system. I'm not sure if it's sewer or drainage from the streets and runoff.

Property is not listed and I don't understand why it's not being offered. But if I have a game plan that's viable and feasible in turning a non=performing property into a good deal - I'd like to make an offer - no?

Thoughts please. Let me know if I'm missing any details or if I should just walk away.

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