Evaluate this Multifamily Deal
I just got an accepted offer on a first deal. It is a 10 unit apartment complex (8x1BR/1BA 2x 2BR/1BA) and a Duplex (3BR/1BA and 1BR/1BA). Below is the spreadsheet analysis. Would appreciate any comments on the deal! I am financing with equity in another property so it is essentially 100% financing. I am not yet sure the terms of financing at this point, but likely fixed for 5 years around 5% then variable.
| Prepared By | Key Investment Criteria | |||||
| Client Name | Max Offer | $ 425,000 | ||||
| Property Address | Down Payment | $ - | ||||
| Number of Units | 12 | Cash Flow (Per 100K) | $88.30 | |||
| List Price | $ 425,000 | % of List Price | Cash Flow (Monthly) | $ 375.29 | ||
| Offer Price | $ 425,000 | 100% | Total Cash In | $ 10,000.00 | ||
| ARV/Appraised Value | $ 450,000 | Debt Service CR | 1.16 | Pref >1.2 | ||
| Discount (%,$) | 0% | $ - | Debt Yield Ratio | 7.65% | Pref >10% | |
| Purchase Price (Max Offer Price) | $ 425,000 | Cap Rate | 7.47% | Pref >8% | ||
| Percent Down | 0% | LTV | 1.00 | Pref <.75 | ||
| Down Payment Amount | $ - | Rent/Price Ratio | 1.35% | Pref 1.25% | ||
| Amount Financed | $ 425,000 | COC ROI Year 1 | 218.0% | |||
| Interest Rate | 5.20% | (Exp+Int)/Income | 84% | |||
| Costs of Repairs | $ 5,000 | Gross Rent Multiplier | 6.3 | Pref <9 | ||
| Closing Costs | $ 5,000 | COC Return | 45.0% | Pref >10% | ||
| Total Cost | $ 435,000 | Break Even Ratio | 93% | Pref <85% | ||
| Length of Mortgage (Years) | 30 | Expense Ratio | 53% | ~50% | ||
| Payment | Monthly | Annual | ARV-Total Cost | $ 15,000 | ||
| Monthly Mortgage Payment | $2,333.72 | $ 28,004.65 | % Investment of ARV | 96% | Pref <75% | |
| 10 year Return | 65% | $284,164 | ||||
| Rental Income | Monthly | Annual | 15 Year Return | 113% | $490,037 | |
| Unit A (10 unit Apt) | $ 4,550.00 | $ 54,600.00 | 20 Year Return | 172% | $748,269 | |
| Unit B (Duplex) | $ 1,250.00 | $ 15,000.00 | ||||
| Unit C | $ - | $ - | DSCR greater than 1.45 | 1.16 | ||
| Unit D | $ - | $ - | Standardized Cashflow >180 | $88.30 | ||
| Gross Rental Income | $ 5,800.00 | $ 69,600.00 | LTV less than .76 | 1.00 | ||
| Vacancy Rate | 8% | ROI year 1 greater than 20% | 218.0% | |||
| Net Rental Income | $ 5,336.00 | $ 64,032.00 | Expense ratio between 45 and 55% | 53% | ||
| Positive initial equity | $ 15,000 | |||||
| Expenses | Monthly | Annual | 15 year return greater than 115% | 113% | ||
| Property Management Fees | $ 320.16 | $ 3,841.92 | 6.0% | Total Cash In Less than 50K | $ 10,000 | |
| Leasing Costs | $ - | $ - | 0% | DYR greater than 9% | 7.65% | |
| Maintenance Reserve | $ 750.00 | $ 9,000.00 | ||||
| Utilities | $ 375.00 | $ 4,500 | ||||
| PropertyTaxes | $ 640.17 | $ 7,682.00 | ||||
| Insurance | $ 325.00 | $ 3,900.00 | ||||
| Other (Snow, Lawn Care, Trash, etc) | $ 216.67 | $ 2,600.00 | ||||
| Total Expenses | $ 2,626.99 | $ 31,523.92 | ||||
| Net Operating Income | $ 2,709.01 | $ 32,508.08 | ||||
| Mortgage Payment | $ 2,333.72 | $ 28,004.65 | ||||
| Total Cash In (Downpayment + Repairs) | $ 10,000.00 | |||||
| Net Cash Flow | $ 375.29 | $ 4,503.43 | ||||
| Investment Analysis | ||||||
| Appreciation Rate (20 YR AVG = 4.4%) | 2.5% | |||||
| Rent Appreciation (20 YR AVG = 3.1%) | 2.5% | |||||
| Cost to Sell Property | 0.0% |