I submitted an offer on a 45 unit apartment building today. It was a call for offers situation so we made (what we thought) was a pretty strong offer. Based on our underwriting which was fairly aggressive we were offering an 8 cap. This is a value add deal in a tiny market in the northeast.
The broker is a one map shop who sells single family homes and the occasional multi. The proforma annual operating expenses were $2300 per unit yer year including management. All tenants pay is electric and the building over 50k square feet. The building is old as hell and we will be lucky to heat it for that amount if oil and gas rebound at all. The broker told me my offer was insulting, that I was a joke, and I about half of what he anticipated other offers coming in at.
It really is too bad because this guy obviously jacked up his clients expectations and now they will never be happy with a realistic number. What is the craziest shit you have seen a broker include in an OM?