Mixed Use Commercial Deal Analysis

[Keske Toyofuku]

Hi All, I've been looking at a number of mixed use commercial properties in the Chicago area by using BP tools as well as my own spreadsheet analysis.  I don't have experience with estimating costs for retail units and associated expenses (vacancy rates, property mgmt costs, etc.) so advice would be helpful.  To make things a little more complicated for myself, it also needs an extensive rehab, but for the sake of analysis, let's fast forward to when rehab is done and focus on proforma. Here's the summary (somewhat ignoring the listing broker's analysis which seemed overly optimistic):

• 28 Unit in Chicago's South Shore
  • (6) Retail - (3) rented, (3) vacant and assumed to need moderate TI
  • (14) 1/1 apt 
  • (8) studio apt 
• Asking $845,000
• Assumed vacancy rate of 20% (applied to both retail and residential units)
• Property tax per the county stays flat (AV is 120k which is 10% of the EV @ 7.841% if I understand the assessor's logic correctly)
• Total Gross Income - $308,400 (annual)
  • Retail 
    • (2) units 62' x 15' - $600
    • (1) unit 62' x 30' -  $2000
    • (1) unit 52' x 25' - $2000
    • (2) units 25' x 15' - $600
  • (14) 1/1 apt - $950
  • (8) studio - $750
• Operating Expenses - $177,000 (annual)
  • vacancy $61,680
  • capex and repairs $30,840
  • water & sewer @ $11760
  • insurance $6000
  • electricity $2400 (assumed tenants pay electricity and gas, thus this is for common areas)
  • garbage $6480
  • property mgmt $30,840
  • property tax $28,200
• Thus NOI - $131,400

Thanks again for any feedback you might have