Finally got a deal closing soon (Fitchburg MA)

2 Replies

Finally found a good deal seller accepted offer and closing soon what do you think, the property is in a good area of town and near the highway so turnover should be low, this is my first deal I found myself.

Property Type: Multi-Family

Lot Size: 15,246 sq.ft.

UNIT INFORMATION

Total Units: 2

Total Square Footage: 1,966

UNIT MIX & RENT ROLL

1 Unit - 3 Beds, 1 Bath

Square Footage: 1,116

Gross Rent: $ 1,350 Per Month

1 Unit - 2 Beds, 1 Bath

Square Footage: 850

Gross Rent: $ 1,050 Per Month

PURCHASE
Purchase Price: $ 141,000
Purchase Costs: + $ 4,230
Rehab Costs: + $ 30,910
Total Cash Needed: = $ 176,140
After Repair Value: $ 235,000
Price Per Square Foot: $ 71.7
Price Per Unit: $ 70,500
RETURNS & RATIOS (Year 1)
Cap Rate (Purchase Price): 11.6%
Cap Rate (Market Value): 6.9%
Cash on Cash Return: 9.3%
Return on Equity: 6.9%
Return on Investment: 35.9%
Rent to Value: 1.7%
Gross Rent Multiplier: 4.9

FINANCING

Cash Purchase BRRR after Renovations

ASSUMPTIONS & PROJECTIONS

Rehab Cost Overrun: 10%

Vacancy: 5%
Appreciation: 1% Per Year
Income Increase: 2% Per Year
Expenses Increase: 2% Per Year

PURCHASE COSTS

Total (3% of Price): $ 4,230

REHAB COSTS

Exterior Paint: $ 800
Interior Paint: $ 2,000
Flooring: $ 2,000
Kitchen: $ 1,800
Bathrooms: $ 2,000
Electrical: $ 3,500

2nd Exit On 2nd Floor: $ 10,000
Replace Drop Ceiling: $ 6,000
Cost Overrun: $ 2,810 (10%)
Total: $ 30,910

CASH FLOW
Gross Rent: $ 2,400
Vacancy (5%): - $ 120
Other Income: + $ 100
Operating Income: = $ 2,380
Operating Expenses (42.9%): - $ 1,020
Net Operating Income: = $ 1,360
Cash Flow: = $ 1,360
Cash Flow Per Unit: $ 680
Monthly
OTHER INCOME
Storage Rental: $100
Monthly
EXPENSES
Property Taxes: $ 275
Insurance: $ 83
Maintenance: $ 192
Capital Expenditures: $ 120
Utilities: $ 350
Total: $ 1,020

Thoughts or ideas


 It doesn't look like you calculated your mortgage payment in the expense, unless you're buying it with your own cash. it looks like a good deal, but if you will have a mortgage payment definitely make sure that will cashflow there. 

the exterior paint for 800 also looks very cheap, not sure the size, hight or how much paint you have to do, but that seems a bit cheap to me. 

other than that looks good and it looks like it will cashflow and you'll be able to pull your money back with a 80% LTV bank

Yeah that's the plan, I should have clarified the paint, it has asbestos siding that's in decent condition which I don't want to touch, but the eves are starting to peel so they need to be scraped and painted, I didn't get a quote or anything but figured it wouldn't be more then that, and I have painting guys that's pretty good so not to worried

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