Looking for some insight

5 Replies

I have a 6 family deal on the table. Asking price 420k I think I could get it for 400k Real estate tax reportedly is $4000 Water sewer $200 reportedly Insurance $2700 per yr Gas $600 per yr Electric $750 per yr Garbage pick up $750 per yr. Plus lawn and snow care Current rental income $3945 After purchase projection $4200 (on low end) Cash flow on purchase would be around $1200 a month... Great neighborhood A+ and the property is in great condition... Looking for help in terms of is this a good deal... and if so what would be the best way to structure it? How in regards of a bank loan? Also as a owner finance option? Does these numbers work at this price point or should my offer be lower as a multi family investment if so what do you suggest? Another thing to keep in mind is that the property is in pittsfield so not a booming city such as Boston obviously which is related to why the rents and purchase price is lower. One of my concern is that it is a low cash on cash return I believe for my current situation.

It's all about the cash flow and you don't have enough info here to really provide good feedback. Roughly your gross income is $48K and expenses are probably going to be at least $25K. What about R&M, Capex, etc.? Make sure your consider all opex and then create a capex schedule that will give you a rough idea of remaining life of capex and what their replacement costs will be. At 400K with financing your numbers are getting skinny quick. Without really looking close at numbers I'm guessing you need to be at 350K PP or below to make this cash flow and worth your time.

This deal sounds too tight...would need to drive down purchase price in order for it to work.

Pittsfield is a great market for undervalued, high quality buildings. We looked at a beautiful mill building some years ago, but the owner wouldn't part with it for a reasonable price--so we walked. Let me know if you see any big building opportunities--we'd love to partner with you @Leon Henry.

$20,000 less in price should not make or break the deal. If it's not worth $420K, it is certainly not worth $400K. There should be no doubt in your mind that $420K works or doesn't work.

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