Help on Multi Family Deal Analysis
Hi,
I've been analyzing SFH and multi family up to Quad, but this 14 unit apartment complex was brought to me and I wanted to get your thoughts on whether this is a good deal or not.
14 Unit Apartment - 6 @ 2 Bd/1ba 1000sq ft, 4 @ 1bd/1ba, 4 @ 3bd/?ba.
Current rent averaging $425 for a little under $6000/mo. Last 3 years of expenses, the highest was $1288/mo. I can get this on a 5/1 ARM loan with 15% down at 4.25% int. I estimate property taxes to be around $6500, and I'm not really sure on how to estimate the cost of insurance. I am partnering up with a few insurance agents and waiting for them to get me quotes back.
Asking price is $575k, but seller has gone down as low as 500k. Hoping to acquire this for 32k/unit or less so around 450k. @ 450k, the down + closing cost would be around 80k
Average rent in the county is $798 for 2bd/2ba, I'm hoping to rent this out to section 8 for around $650. Currently there are no vacancies, so in the short run, the goal is to raise rents by around $65/year and vacant properties will be made rent ready and bumped to $650.
I hope this is enough information for you to be able to help me analyze whether this is a good deal and/or if my thought process around bringing rents up is achievable. The goal to get this apartment fully to market rent will most likely be a 3-5 year plan. Based on my calculations, after getting the property to market rent, I should be able to cash flow around $2400/month which will give me a 36% COC at that rate.
Any thoughts or advice is greatly appreciated.