New to Syndication but have a deal

[Evan Kline]

I've been on the side lines for about 6 months, reading, researching, learning, etc. 

I've found my first deal and hope to close within the month- duplex which will return 20-30% CoC.

I've found a second, much larger deal: a set of 6 multi-family buildings, that make up 19 units. 

Location: across the street from a well respected, but small, university. The neighborhood is B- to C+, but because it's right next to the university, the crime rate is almost non-existent due to a robust campus police force. 

Asking Price: 629,900

Average monthly rent: $8,600

Yearly Taxes: $6,669

Based on my analysis (but I of course could be wrong), this has a Cap Rate of over 10%, even if I include a property management fee

All my personal money is tied up currently in this first duplex. I've read here on BP syndication is a potential option, but I'm not sure the steps to take down that road.

Any thoughts/help?

[Nick B.]

@Evan Kline,

You did not provide enough information. Here is what you need:

Income:

• current rents
• market rents
• current economic vacancy: (gross potential rent - collected rent)/gross potential
• typical economic vacancy for the sub-market (but don't go below 10%!)
• other income if any

Expenses (current and projected):

• payroll
• property management (not the same as payroll!)
• general admin
• contract services
• marketing
• repair and maintenance
• make ready 
• utilities paid by owner
• property taxes
• insurance

Once you'll get all these items, you'll be able to analyze this property:

Future NOI = (Market rent * (100% - Economic vacancy) + other income) - projected expenses

Future value = NOI/Future cap rate

Your max offer price = Future value * 80% - initial repair costs