Multi Unit - What is a good per door price?

[Eliott G.]

I am looking in the 8-20 unit range for a multi-unit property.

One I found is a 12 Unit building listed at $385,000 in the midwest.
It is currently 100% occupied.
It has had major updates in the last 3-5 years.
Each unit is 2 bedrooms/1 bathroom.
Each unit rents for $450 (about average for the area-blue color).

The $32,083 per door price seems quite high.
I have read many of the topics and seen possible prices as low as $10,000 per door firesale or more realistically about $20,000 per door.

If I could get it for $300,000 ($25,000 per door) does it make sense?

10% cash down payment
$270,000 mortgage
10%-20% owner financed 7.5% (5 year Balloon, 30 year amort)
70-80% Bank financed 7.5% (5 year Arm, 25 year amort)

Rents = $450*12 = 5400/month
Annual Insurance is $250/month
Property Tax is 2% of value (300,000*.02 = $6,000) $500/month
Utilities are probably $900/month

Is this a good deal? If not what price should I pay?

[Michael Rossi]

Eliott,

It isn't the cost per door that's important, it's the cash flow per door (as Norm said).

Here's how I see your deal:

Gross rents: $5,400
Operating Expenses: $2,700
NOI: $2,700

Less Desired Cash Flow: $1,200

Money Available for Mortgage Payment (P & I only): $1,500

Putting that in a mortgage calculator with a 30 yr term and 7% interest rate, that gives the maximum purchase price $225,461 (less any repairs needed).

Good Luck,

Mike