Looking to buy our first multi-family deal. I own a commercial construction company so can do the rehab in-house. Here's the breakdown. Trying to see what I'm missing here.
@Chad Emerson Your OpEx at $60K (around 36% of EGI) feels a little light for a 30-door property. Even with efficient management, taxes, insurance, maintenance, and reserves usually push closer to the 45–50% range in most markets, Fayetteville included. Might be worth running a "what-if" scenario at that level just to see where cash flow lands. The rehab number looks great if it's mainly cosmetic and you're handling it in-house — huge advantage there. If any major systems (roofs, plumbing, HVAC) are due, you may want to pad that line item slightly. The DSCR and Cap Rate both look strong — even if expenses came in higher, you'd still have good breathing room. That's a sign of a solid deal structure. I'd also run a quick stabilized value check. If the ARV lands around $1.1–$1.2M post-rehab, you could have a great opportunity to refi and pull out most of your initial capital. All in all, this pencils really well. Tighten up the expense assumptions, confirm your stabilized appraisal, and it looks like you’ve got a nice value-add play here. Great find.
Looking to buy our first multi-family deal. I own a commercial construction company so can do the rehab in-house. Here's the breakdown. Trying to see what I'm missing here.
Category
Amount
Purchase Price
$550,000
Rehab Budget
$185,000
Closing Costs
$17,000
Total Project Cost
$752,000
Effective Gross Income
$168,120
Operating Expenses
($60,000)
NOI
$108,120
Debt Service
($48,852)
Annual Cash Flow
$59,268
Monthly Cash Flow
$4,939
Cap Rate (on cost)
14.4%
DSCR
2.21
Cash-on-Cash Return
31.8%
Hey @Chad Emerson, welcome to the BP Forum! Thanks for sharing your numbers. What's the ARV, $825k? Is the average rent under $500? Is the LTV % 75% and the amort for the loan, 25 or 30 years?
Yes, the stabilized ARV is projected around 825k, though we anticipate a refinance valuation closer to 950k–980k once renovations are complete and rents stabilize. Average rent across the units will be closer to 700–750, not 500 — that figure just reflected legacy rates before we took over.
We’re financing at roughly 75% LTV with a 20-year amortization and an initial construction period at 7.75% interest, dropping to 6.63% once we transition into permanent financing.
We also added a restaurant to the purchase — we paid 162k cash for it and are signing a lease-to-own contract in the next few days. That portion of the project is valued at about 729k, so it added a strong income component and long-term upside to the deal.
This is my first deal on my own, so I’m learning as I go — but I’ve managed CapEx projects for multifamily groups for years, so I’m applying that experience here and figuring out the investor side as I build.
Yes, the stabilized ARV is projected around 825k, though we anticipate a refinance valuation closer to 950k–980k once renovations are complete and rents stabilize. Average rent across the units will be closer to 700–750, not 500 — that figure just reflected legacy rates before we took over.
We're financing at roughly 75% LTV with a 20-year amortization and an initial construction period at 7.75% interest, dropping to 6.63% once we transition into permanent financing.
We also added a restaurant to the purchase — we paid 162k cash for it and are signing a lease-to-own contract in the next few days. That portion of the project is valued at about 729k, so it added a strong income component and long-term upside to the deal.
This is my first deal on my own, so I'm learning as I go — but I've managed CapEx projects for multifamily groups for years, so I'm applying that experience here and figuring out the investor side as I build.
@Chad Emerson 20-year amort sounds like you're getting financing from a local bank/credit union, is that correct?
@Chad Emerson Your OpEx at $60K (around 36% of EGI) feels a little light for a 30-door property. Even with efficient management, taxes, insurance, maintenance, and reserves usually push closer to the 45–50% range in most markets, Fayetteville included. Might be worth running a "what-if" scenario at that level just to see where cash flow lands. The rehab number looks great if it's mainly cosmetic and you're handling it in-house — huge advantage there. If any major systems (roofs, plumbing, HVAC) are due, you may want to pad that line item slightly. The DSCR and Cap Rate both look strong — even if expenses came in higher, you'd still have good breathing room. That's a sign of a solid deal structure. I'd also run a quick stabilized value check. If the ARV lands around $1.1–$1.2M post-rehab, you could have a great opportunity to refi and pull out most of your initial capital. All in all, this pencils really well. Tighten up the expense assumptions, confirm your stabilized appraisal, and it looks like you’ve got a nice value-add play here. Great find.
Thank you, Corey. That’s really helpful insight. Expenses have definitely been the big question mark for us on this one. I live nearby, and my crew will actually be renting a few of the units since we travel for Tractor Supply buildouts and similar projects, so overall maintenance should stay pretty low.
The roof is new and already has solar, which helps a lot, and each unit has its own PTAC system for heating and cooling.
I’ll keep you posted on how it goes. This is my first deal of my own. We’ve handled CapEx projects for other multifamily firms before, but it’s exciting to finally step into ownership.