Multi Family Deal Analysis

[Gabriel Miritello]

Ide Like to get your thoughts on a property that I came across.

7 Unit MF - 2 buildings - side by side.

Asking :$478K

Current rent: all renated $600 ea - month to month 

market rate rent for 2/1: $900-1100 depending on quality and location(I would guess $900-1000 in this area)

info

-6 of 7 units - 2 BD/1BA, 7th unit - 1/1

-6 of 7 Electric is paid by tenant

-#7 Unit is paid by landlord because it is on the same meter as the laundry space

-laundry space has broken equipment, i am thinking convert into suite(only Unit with gas - paid by landlord)

-water and trash paid by landlord

-AC - 5 of 7 are window units; 2 are swamp coolers

-ample sized parking area- that is half gravel half dirt(significant signs of ponding)

-electric is 3 prong but it looks like 70 AMP units in each unit

-foam roofs 11 years old

-I walked 2 units - outdated and rough but not horrible 

I think it will need significant upgrades to get to $900-1000.

list

-Parking area surfacing

-roof resurfaced

-mini splits

-electric to support

-water submettered

-electrical amp upgrades

-cosmetics to exterior and interior

-washer dryer wiring install to all units

-I am thinking we'll over $100k

The positives

-ability to add a suite in place of poorly run laundry ($700 a month)

-all the units have a parking stall that seperates one unit from the other. The potential to inclose and make an extra bedroom is possible. $1000-1200 possible.

-owner said he would fiance at 30% down and 6%. Not great and i can get better from leanders but i know that he bought it cash and is willing to carry for 30 years.

My thoughts

-its priced as if it were performaning at $900 per unit already. 

-i am thinking about a lease option offer. Offer around $20k for the option to buy at $400k. 5 year agreement to get people stablized. I would need a construction loan as i do not have that type of cash. 

Before I dive into money resourcing is this deal worth it. I feel it may be, but wanted to get your thoughts. Thanks

[Michael Eskenasy]

A quick way I’d think about this is to separate current performance vs stabilized performance and see where the price sits. Right now the property is doing about: 7 units × $600 = $4,200/month ≈ $50,400/year gross At the $478K asking price, that’s already roughly a 9.5 GRM, and the landlord is still covering water, trash, and part of the electric/gas. For a property that still needs significant upgrades, that feels a bit rich. If the units get to the $900 range, the math starts looking like: 6 × $900 = $5,400 1 × ~$700 (converted laundry) = $700 ≈ $6,100/month ≈ $73,200/year gross Using a rough 40–45% expense ratio (since utilities and older systems are involved), you’d end up somewhere around $40K NOI once stabilized. At an 8 cap, that values the stabilized property somewhere around $500K. The issue is that if you buy near $478K and then put $100K+ into upgrades, your basis could easily end up around $575–580K, which is above where the stabilized value might land. That’s why it feels like the property is already priced as if the $900 rents exist. Where it might start making more sense: • purchase price closer to $350–400K • or if rents realistically reach $1,050–1,100 after improvements • or if the seller financing terms are unusually favorable Otherwise the numbers look tight for the amount of work you’re describing. Curious what the local cap rates are where this is located — that would probably be the biggest swing factor.