Help with Rental units analysis going to auction

[Dee Xixi]

Hi Folks,

There is this 96 units property going to auction. As I am preparing a financial summary for a 25/75 split equity. 25%---me and the equity partner 75%.

Here is the number

23 studios x 800 = 18,400 ....... low end rent (800-875)
40 One Bedroom x 1125 = 45,000..... Low end rent (1125-1175)
33 Two Bedroom x $1225.00 = 40,425...... Low end rent (1225-1300)

Monthly Income: 103,825
Yearly: 1,245,900
Other income (laundry): 5,000 (very conservative)

AGI: 1,250,900

Figuring out Acquisition Price

Expense analysis @ (50% rules) = 625,450

Net Revenue: 1,250,900 - 625,450 = 625,450 (subtract the 50% operating expenses from the gross revenue to solve for the net operating income (NOI).

Cap Rate = (NOI / Purchase Price)

Purchase Price = (Net Operating Income) / (Cap Rate = 10%)

625,450 /10% = 6,254, 500

@ Cap Rate = 7%

8,935,000



Offer price:

Factoring acquisition @ (10% cap rate incl ( Rehab + 3% acquisition cost)) = 450,000 + 187,635 = 637,635

6,254,500 - 637,635 = 5,616,865

@ 7%

8,935,000 - 718,050 = 8,216,950

I am thinking at the auction 6.5- 6.8 mil probably the highest I should bid. Any feedbacks.

Exist strategy:

Refinance property in 5 years with Government back loan to payoff equity investor.

Sale home for a profit in 5 years based on a Net Operating Income with Cap Rate of 7-10%. should have enough money to pay investor.

Does anyone have a good investment pro forma? please