Help analyze 8-unit in Cleveland

[Nathan Kyle Taufer]

Off market 8 unit brick apartment building in Cleveland built in 1920, Manhattan Beach area

Purchase price - $145000

Rehab costs - $30000 (cosmetic consisting of windows/paint/flooring/trim/carpentry)

(6) 1-1 units under market, currently at $475/mo, raising to $550/mo after rehab 

(2) 2-1 units at $600/mo, raising to $625/mo after rehab

Electrical, roof, foundation, water heaters, furnaces solid

Rent Roll $54600

Property management 8% $4370

Vacancy est 10% $5460

Maintenance est 14% $7644

Taxes $4200

Insurance $1900

Water $4000

Trash/lawn/snow $1200

NOI $25826, or 14.4% ROI at low end $269 NOI per door per month

These are high ball estimates, the building is older, 1920, but it is solid, just needs a new dress for these solid bones. I don't anticipate 14% maintenance or 10% vacancy, but thinking worst case scenario always helps me evaluate the deal and helps mitigate any unforseen circumstances. Plus if allotting for new roof/heater/water heater every so many years, allotting 5-6% of that cost every year just helps with any big hit items in the future.

Thoughts? Any strategies to reduce water costs? Can I individually meter out water in Cleveland and recapture that $4000?

Thanks, Nate

[James Wise]

Originally posted by @Nathan Kyle Taufer:

Off market 8 unit brick apartment building in Cleveland built in 1920, Manhattan Beach area

Purchase price - $145000

Rehab costs - $30000 (cosmetic consisting of windows/paint/flooring/trim/carpentry)

(6) 1-1 units under market, currently at $475/mo, raising to $550/mo after rehab 

(2) 2-1 units at $600/mo, raising to $625/mo after rehab

Electrical, roof, foundation, water heaters, furnaces solid

Rent Roll $54600

Property management 8% $4370

Vacancy est 10% $5460

Maintenance est 14% $7644

Taxes $4200

Insurance $1900

Water $4000

Trash/lawn/snow $1200

NOI $25826, or 14.4% ROI at low end $269 NOI per door per month

These are high ball estimates, the building is older, 1920, but it is solid, just needs a new dress for these solid bones. I don't anticipate 14% maintenance or 10% vacancy, but thinking worst case scenario always helps me evaluate the deal and helps mitigate any unforseen circumstances. Plus if allotting for new roof/heater/water heater every so many years, allotting 5-6% of that cost every year just helps with any big hit items in the future.

Thoughts? Any strategies to reduce water costs? Can I individually meter out water in Cleveland and recapture that $4000?

Thanks, Nate

What do you know about operating rental properties in the ghetto? That's much more important of a question than any of the numbers you've plugged in up top.