Sanity check on dead deal

[Joseph Gibney]

Hi all - my wife and I made our first 4-plex offer last week and our deal was rejected out of hand.  I am fairly confident in our valuation, but just looking for a sanity check:

• Asking price:  $220K
• Rent per unit (x4):  $475
• Ratio of operating expenses to rent (all expenses verified with reasonable assumptions around property management, vacancy, maintenance, etc):  54%
• Annual capex budget of $1,900 (1x monthly rent per unit)
• Pre-tax cash flow per month $360 ($90 per door)

My valuation was  $100K-120K (1.9 to 1.6x rent).  Apparently the sellers turned down an offer of $185K earlier in the year, so I didn't have a chance.  However, looking at the numbers, I think my valuation was pretty fair - in fact, even a bit aggressive.

My feeling is that the seller just has unreasonable price expectations (and we've already moved on with offers on two other 4-plexes) but I'm curious if people think my numbers/ratios are in range.

Cheers!  Joe