I'm new to biggerpockets and have been learning and absorbing as much as I can about multi-plex deals which is my goal. I will be moving to New London CT in a couple of months and have been looking for future opportunities there. Ultimate goal is to do BRRR but for now, with my full time job am looking into buying multi-family and rehabbing a little, usually new paint, simple fixes.
I ran an analysis on this multi-plex a couple of days ago with decent cash flow. Wondering what people think about this deal? Has been on the market since August. I put in the asking price (239,000) but would realistically shoot for 70-75% about 167-170,000. These are the numbers:
5 units, fully rented with long term tenants (per loopnet)
Monthly Income: $2875
Monthly Expenses: $2351.34
Cash Flow: $523
Cash on Cash ROI: 19.7%
NOI: $18,607 ($20,700 per loopnet)
Accounted for 11% vacancies, 3% growth, 5% repairs, $326 for property taxes monthly, $250 monthly insurance, 10% property management
Monthly rents currently are a little low compared to area, $575/unit/month but I think with some new paint and simple fixes we could increase that to market value around $700. All of these calculations are with current rent and per loopnet all five units are occupied.
Thanks for any input!
Does your Monthly Expenses ($2351.34) include mortgage P&I? From the amounts/percentages listed later I am only getting $1323 in expenses. These need to be keep separate for us to evaluate the deal. You are also missing some expense items (CapEx, Lawn care/Snow removal, Garbage, any utilities, legal, accounting, etc).
What kind of financing are you using? Remember with 5-units you can not use residential home loans. You will need a commercial or Portfolio loan.
Hope this helps. :)
@Mia Edgar what is your plan for financing?
I currently have a duplex in California and have been landlording for about 2 years. Would there be options for a commercial loan, not owner occupied?
Inputting CapEx to 5% per month about $133 would decrease the cash flow to about $350/month. That's a good point utilities, lawn care would also dig into the expenses.
Mia, I would go residential loan refi on your duplex. Rates are amazing right now and will only go up. I can discuss your options. NIV, 80% LTV, cash out, programs are very lenient.
As far as the 5 unit - you know you have to go commercial. The expennses seem very high so I guess it includes the mortgage. You need to separate that out so investors can look at the non-loan expenses. The deal is relatively small for commercial and you are an out-of-state investor which = tough. Most banks will not touch this. I have an associate commercial broker can can do this loan for you depending on your credit - Karen Schimpf - she is on this site
@Mia Edgar welcome to the area in advance :). That price seems a bit high to me for a 5 family in the area with rents at that price. We've looked into a lot of multifamilies in the area and can maybe point you to some good deals. Message me and we can talk.
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