I have lots of experience with single family homes but I'm looking at my first multi and I needed help. It doesn't have any deferred maintenance and looks nice. Gross rents are 40,800 which is about right. 4 units all 2 beds. Landlord pays water. I always figure vacancy and repair at 20 percent. Asking price is 374k. What do you think? I prefer smaller caps in nicer areas so it is more expensive here.
What does your pro forma show the NOI to be? Have you been able to verify the expenses and collected rents?
I have figured 200 a month in water, 3400 in rent minus 20%=2720. Insurance at 100. Taxes at 416. I've researched all these and believe they are correct. That brings me to 2004 in net income. A 225k 6.5% 30 year mortgage would be 1422. That's $582 net which is what I'd feel comfortable with. So basically that's 150k down. 4.8% cash on cash return. Sound right? In my mind it the unit should go for 340k with 115k down to achieve the 6% cash on cash return I like. Still sound right?
You are missing a few pieces for expenses. Grounds keeping / landscaping / snow removal, trash collection and dumpster if needed, any common areas that need to be cleaned weekly or every few weeks, like hallways (weekly) or basements (would need to be cleaned out every few monthly at the very least), sometimes things like furniture and mattresses will need to be removed from property, any common area electric bills (call local energy company and ask for landlord responsibility)? Does the landlord pay for heat (can call your local energy company)? Verify your water costs (call water company and ask for average, tell them why you need a number). Would you use property management? Depending on class of neighborhood, you might need to budget for evictions and sheriff costs.
it sounds to me like this property to priced too high.