Can anyone please look at our numbers?

Question

Hi All! This is our 2nd multifamily deal and this time we really want the numbers to be right. Would anyone be willing to look at it? We'd appreciate any input. Thank you!

here is the link:

https://www.biggerpockets.com/calculators/shared/219457/ffe46b3e-2046-4472-9768-d075d7b28c5a

Edward Sheridan · Answer

@Jeff Kehl thanks so much! very thoughtful! I haven't seen it the property yet but will definitely look into heating.

Jeff Kehl · Answer

@Edward Sheridan I would echo what others have said... the returns don't look great to me compared to what I am used to here but I see the property is 2 hours from NYC so that may be the best you can do there.

I wouldn't rush to 'easily' convert it to a 4 unit. Are you sure whatever government body is there would approve that? And don't assume you can do it without having a contractor take a look at it.

Last 'wet blanket' comment. In the pictures I see electric baseboard heat. Is that how all of the units are heated? What does that cost a tenant? In New York I would think that is a very expensive way to heat. See if you can find out the utility bills from the local utility or a current/former tenant. Even if you don't pay the bills it might make it unappealing to tenants.

Sorry to be negative, but I'm trying to help. It looks like a cool property but make sure you check everything out and don't fall in love with it.

Edward Sheridan · Answer

Thanks so much guys! You rock!

We do not plan to live in one of the units. I will fix the management fee. thanks!!  One of the units can be easily (so I was told) converted into 1BR 1 Bath and 2BR 1 Bath + already has 2 meters and separate septic. That would raise the monthly income by $300. And we also could offer less money?

Nathan Waters · Answer

@Edward Sheridan

It looks like a nice house. My biggest concerns with the numbers are the cash on cash return and the cap rate. I say this without knowing your area though. I personally would not invest in a property that produces less than 6% ROI. Are there areas near you that could cashflow better? Are you looking to make money on appreciation or are you looking for cashflow?

Jeff Brower · Answer

The only thing that I see missing is a management % factor. Even though you may start off self managing, you wont want too forever correct? 8-10% for management is what most folks use. Also, does the seller pay any of the utilities? I don't see that factored in anywhere besides the $40 per month misc. Factoring 8% mgmt brings your 375 per month cash flow down to 113 per month. For 3 doors, that is a bit tight.

John G. · Answer

Personally, I like to see 15% cash on cash and a higher Cap rate.  But my market is way different then yours I'm sure.  That's just what I look for anyways.  That's a lot of cash out of pocket for the returns your getting

Edward Sheridan · Answer

here is the MLS listing:

http://www.midhudsonmls.com/Reports.asp?CMAID=6800238&Date=3/9/2017&Time=14:36&ReportID=c%5Fmap