20 Unit in Olathe, Kansas (Kansas City Area) Analysis
Here is yet another multi-family deal analysis that I am doing. This one is a 20 unit apartment complex in Olathe, Kansas, which is in the Kansas City suburbs. The location is near downtown Olathe, which is older and a little rougher than other parts of Olathe, but still a relatively good area. The rental vacancy rate for Johnson County is 94-95%. The county appraiser has the building valued at $561,000 for 2014. This building is listed on the MLS here.
Asking Price $737,500
20 Units
built in 1979
8 are 2 bed/1bath, 11 are 1 bed/1bath, and 1 is a studio
Gross Income $128,460 (average $535.25 per unit a month)
Owner pays water/sewer/trash
Financials:
They were not provided in the listing, so I am estimating on some costs.
Down payment $184,375 (25%)
Mortgage Estimate $3650/month (estimated 5 year balloon, 20 year amortization, 5% interest, 25% down payment)
Vacancy Loss $12,846 (10% estimate)
Adjusted Gross Income $115,614
Property Taxes $7975 (2013 actual amount)
Insurance $3500 (estimate)
Maintenance $12,846 (10% Gross Income)
Water/Utilities $14,400 (estimate $60/month per unit)
Property Management $12,846 (10% Gross Income)
Operating Expenses $51,567
Net Operating Income (before financing) $64,047
Annual Mortgage $43,800
Income (after financing) $20,247/year, $1687/month
Cash on Cash Return 10.98%
Am I underestimating key costs here? Any advice in my analysis would be helpful. Also, I have no clue how much closing costs would be for properties in this price range getting financing from smaller local banks.