Our first 12 units apartment deal

[Jian G.]

Hello everyone,

We found an off market deal in San Diego. It is our first apartment deal and we have been looking for a little while. As some of you know San Diego like many populated city, the cap rate and cash on cash are not as exciting as many areas in the US. I would like to see what everyone’s opinion on the deal.

The property is a class C building:

Asking price: $2,750,000

$239,167 per unit and 265/sqft

12 units all 2 bed and 1.5 bath

Current rent is $1600 with 2 room vacancy(bring renovate)

Projected rent is 1800

Noi is currently at 157k and market at 185k

We used the rental and Brrrr calculator and based on the different input the outcome change a lot. We are looking for help and opinion on analyzing the deal and make an offer?

[Nick Foster]

@Jian Guan, the cap rate of 5.7% for multi-family in San Diego sounds too good to be true. Coastal multi-family I believe trades between a 2-4% cap.

Where in S.D. is the property? I am guessing East County, based on the low rents (coastal rents are north of $2K/mo) and the higher cap, unless the seller just has no idea on the value of what they have.

As others have said, likely the NOI presented to you is inaccurate and the pro-forma isn't worth much. You have to construct your own model.