The asking price assumes the completion of a $1,832,012.00 construction contract with Serve All Contracting, Inc. Rents are very low and there are many vacancies due to the remodeling work. It’s reasonable to assume that the value will approach $9-million with the completion of a remodel.

The current construction contract is a settlement with the city of South Lake Tahoe. Included is the complete remodel of 6 units. A rough estimate by the contractor is that all units could be brought to the level of the 6 for $750k. At the time of this writing, only $824,405 of the contract is left to complete. Completion is expected by the end of summer. If a sale is consummated before the contract is complete, the remaining funds could be held in escrow. According to the settlement agreement with the city of South Lake Tahoe, if construction is not complete, approval by the city manager will be required before close of escrow.

Comparables show that the 21-2bd units could rent for $1,795, the 12-1bd at $1,495, the 2 studios at $1,200, and the one 3bd 2ba managers unit, for $2,095. The potential rent roll is $62,350. CoStar shows a 1.8% vacancy in the area. Assuming 2% vacancy and 38% expenses, NOI would be $454,606. The average cap rate of 20 comparables from CoStar is 5.4% or an $8,420,000 value. A 5% cap rate = $9,092,000.

The location of these apartments are excellent. They are roughly half way between the lake and the ski lifts with public transportation within a block. There are wonderful restaurants and shopping within a few blocks, and it’s only 1.4 miles to the casinos in Stateline. The property is surrounded by beautiful trees and mountains.