Help me analyze this 30 unit deal

[Stephen Jones]

BP,

I have a 30 unit multifamily off market deal on the table that I am going back and forth with. I will list out the pros and cons and then break down the numbers as best as I can. Any feedback would be a huge help and greatly appreciated!

Pros- 

- Outstanding cash flow

- Great small community with good school system

- Mixed Units, 17- 2 BEDS/ 18-1 BEDS/ 1- Bed

- Low vacancy rate

- Common area laundry

Cons- 

- Extremely old building, 2 buildings total, an old school turns into multifamily living, built in the 1900's

- Exterior isn't the nicest looking, it needs a lot of TLC. 

- Not the best location, the community that its in is about 10,000 people in the state of Illinois about 30 minutes outside of St. Louis.

- Not sure if inspected everything will meet up to code. 

-Could be a lot of maintenance

Purchase Price- 1.25 million

15% downpayment

Rent Roll- 224,700

Raised Expenses-

Taxes- 33,000

Insurance-11,000

Utilities- 23,000

Water- 10,000

Trash- 3,000

Repairs and Maintenance- 17,000

If there are any further questions please feel free to ask. The reason I would be buying this is due to the extremely lucrative cash flow. Thanks!

[Evan Polaski]

@Stephen Jones, there are a lot of expenses missing: interest expense, management fees, leasing commissions, payroll, vacancy reserve and Capex are the big ones I can name now.

I would tour this property with a management company and have them help you build your budget, then assess whether this is really a cash flow king.