Evaluating 6 unit multi family with Seller financing

[Pratik Kochar]

Hello BP members, 

I am in the process of evaluating 6 unit multi family with tenants in place until Feb 2026. 

3 unit ( 2 b 2.5 bath) townhome

3 unit (studio 1b 1b) 

Here are the numbers 

Asking Price : $725000

Down Payment : 25%

Seller Financing : 3.5% (Interest Only) 

5yr balloon period ( Principal Amount due : $543750)

Total Gross Rental Income : ~$81000 annually

Total Annual expenses : $45400

$7200(Property Management)

$12000(Owner Paid Utilities)

$12000 (Taxes + Insurance) 

$2200( Pest control + landscaping) 

$12000 (Repairs/Capex Reserve )

Net Operating Income : $81000-$45400 = $35600

Total Cash Invested : $181250(down payment) + $13000 (closing cost) 

Annual Deb Service : ~$19000(Interest only)

Net Income : $35600 - $19000 = $16600

Cash flow per month : $1400 

Cash on Cash Return : ~8.5%

There is an upside potential on increasing the rent on 2B units during lease renewal. 

I own 4 single family LTR rental properties & this is my first time evaluating 6 unit apartment complex kind of deal and need inputs from fellow investors if I am overlooking any aspect of multi family investment. 

[Gabriel Watts]

Since it's 6 units. It will be valued on a cap rate basis. And with that NOI is a 4.9 cap. That's petty low cap rate. Is it in a high appreciated or expensive area? You also havnt factored in vacancy. Me personally, unless it's like prime NY or Cali real estate. These assets are typically going to trade between 6-8 depending on market and area. So it does seem rather over priced. Especially with how the commercial multi family space is trading right now