What should I pay? 12 unit
Hi, I am Calvin and this is my first post. I have 8ish years of experience with part time flipping, and bought my first property through my Dad while still in high school. I have full or partnered ownership in 22 rental units. I am currently evaluating a 12 unit.
My question is this: Should I make the move to multi-family and what is this 12 unit worth? Also, what would you advise as to insurance as this would become my largest concentration of equity with a 25% down payment?
The context: The owner has not stated a price, but has allowed me to look at the vacant units and said he was open to offers. The property is not publicly listed. Property exterior is in phenomenal shape. New Roof, boilers, laundry units. Carports. Units are all very similar with older kitchens and laminate flooring, most have had new carpet and paint with the last tenant turn. Most bathrooms are in good shape with slightly outdated look.
The numbers:
12 units (9 2 bed and 3 1 bed) $740 average rent for all units. I believe it to be 10% under market.
Coil Laundry - $2,500
Area is an A or B, suburb location within 20 minutes of Grand Rapids, MI.
The Expenses:
9% property management with 40% placement fee
Vacancy has been 12%, but I believe this to be an error of management and timing of leases.
Taxes at $15,000 (potential of going up with transfer of ownership of course)
$600 in electric costs
$6000 in gas costs (radiant heat)
$3000 in water costs
$1800 in trash, lawn, snow removal
The loan, and the insurance (which will be decided by all of you as you will help me know what to offer!)
Thanks for the help in advance guys!