Multifamily Deal Analysis

[Gursimran Singh]

The property address is 509 Lincoln Road W, Vallejo, CA. 11 unit building that consists of (5) 2 Bed, 1 Bath units and (6) 1 Bed, 1 Bath. 

Asking Price - $1,595,000

Yearly Analysis is based on average market rents 100% capacity.

Income-based off average rent ($1,453 for 1 Bed) ($1,728 for 2 Bed) 

     Revenue -  $208,296 ($8,640+$8,718*12)

     Expenses - $114,562 (Rough estimate 55% of income)

.   NOI - $93,734

.   Purchase Price - $1,102,752 (Based off NOI at 8.5 cap rate)

.   Down Payment - $275,688 (25% of purchase price)

.   Rehab = $27500 (at $2500 per unit)

.   Loan Payment - $46920 (Amortized over 30 years at 3.92% interest)

.   Total Cash In - $303188

 .   Cash Flow - $46814

.   ROI - %15.4

Where are the flaws in this analysis? How should rehab be determined per unit? If brokers are not picking up the phone for rent rolls do I analyze the deal based on average market rents? How does this deal look to you?

Again, any input is appreciated I am open to criticism and the oppurtunity to learn from this. Thanks again, everyone!

[Michael Y.]

First thing that I noticed is the 100% occupied, I would run projections based on having some units vacant for a certain period of time. The rehab is fine per unit as a light refresh, but I would make sure the existing building doesn't need repairs or larger rehab items if needed as you didn't budget for that.