8 Plex Analysis - Thoughts/Suggestions??
Hey there, I am new to the forums and RE Investing. I have not done a deal yet, but have been researching and analyzing deals for well over 3 years now. Like many of you, I have listened to every BiggerPockets podcast twice over, and read 90% of the books from the recommendations.
I'd love for any of the BiggerPockets members to take a look at this potential deal I'm considering. It is an 8 plex that needs some rehab.
| Advertised Price | $290,000.00 |
| Advertised Cap Rate | 7.40% |
| Implied NOI | $21,460.00 |
| Units | 8 |
| Four - 2 Bed/1 Bath ($575; $650; $620; $615) | $2,460 |
| Four - 1 Bed/1 Bath ($550; $535; $575; $550) | $2,210 |
| 2 Bed Units | $2,460 |
| 1 Bed Units | $2,210 |
| Vacancy | 5% |
| Total Revenue (Mo.) | $4,436.50 |
| Total Revenue (Ann.) | $53,238.00 |
| Taxes | $8,420.00 |
| Insurance | $3,551.00 |
| Cleaning & Maintenance | $6,835.00 |
| Gas/ Electric Common | $1,416.00 |
| Management Fee (6%) | $3,194.00 |
| Sewer | $3,000.00 |
| Water | $2,800.00 |
| Waste | $1,044.00 |
| Misc. Expenses | $5,850.00 |
| Lawn + Snow Removal | $1,200.00 |
| Total Expenses (Ann.) | $37,310.00 |
| NOI (Ann.) - ACTUAL | $15,928.00 |
| NOI (Mo.) - ACTUAL | $1,327.33 |
| Debt Service Payment | $1,200.00 |
| Cash Flow (Mo.) | $127.23 |
I found some differences from the actual Schedule E from 2016 & 2017, so the numbers I were given were not quite telling the whole story. The numbers above show a more accurate image of the numbers. The property was built in 1977, and has some deferred maintenance. It has also been on the market for over 3 months now.
One thing that needs to be done immediately is waterproofing of the basement, which should be around $7,500. I am looking at the property this week to check the inside of the units.
With a face-lift to the outside (paint, repair decks, repair entry door awning, general cosmetics), the basement waterproofing repairs, and any immediate rehab needed to the interiors, I have estimated the following numbers.
| Four - 2 Bed/1 Bath | $750 |
| Four - 1 Bed/1 Bath | $675 |
| Vacancy (5%) | 0.95 |
| Basement Storage Units (4) | $65 |
| Garage Stalls (4) | $50 |
| Total Revenue (Mo.) | $5,852.00 |
| Total Revenue (Ann.) | $70,224.00 |
| Total Expenses (50%) | $35,112.00 |
| NOI (Ann.) | $35,112.00 |
| NOI (Mo.) | $2,926.00 |
| Debt Service Payment | $2,000.00 |
| Cash Flow (Mo.) | $926.00 |
| Cash Flow (Yr.) | $11,112.00 |
| Cap Rate | 10% |
| Implied Rennovated Value | $351,120.00 |
| Cap Rate After Renn. | 16.33% |
I have increased rents, along with added a garage with 4 stalls. The storage units in the basement will simply be small closets with locked doors for each unit. The debt service payment assumes also paying down construction debt, which I will borrow from family.
Any feedback would be awesome on my numbers/estimates! Please let me know if you feel my numbers are not conservative enough. I plan to hire a management firm after I get the rehab items done. Good or bad idea on first multi-family purchase?
Does this seem like too big of a project for a first time multi-family buyer?
I have secured 85% financing, so I'm looking to offer 10% Seller Finance on $240,000 with $25,000 back at closing for rehab allowance. All feedback is greatly appreciated!!