Green Bay MFH Analysis Advices?

2 Replies

Hi fellows,

I'm currently talking to a broker in Green Bay, he is proposing me this revised analysis on this property.  I'm still new at this kind of investment, and I'm on the learning curve here. I've already posted the first proposal, in the "Multi-Family and Apartment Investing Forums" I got some good real-estate pieces of advice 2 days ago. Here is the link to my previous post. (I've tried to bump the 5% maintenance to 10% with Cap X/repairs and he viewed as unnecessary... Hum)

After, I went back with some numbers and a more creative approach. Below is the new proposal. Any thought? Also, What should I be more cautious about this 2snd proposal? It seems to little be above the 1% rule, If Am I correct? 

550x 4 month:$2,200.00 Yr:$26,400.00

Total $26,400.00 -

Income

Rental Income $26,400.00

Coin-op $1,200.00

Vacancy/ Credit Allowance 5% $1,320.00

Total Income $26,280.00

Expenses -Best guess and ests totals

(5% min $200)

Management $2,400.00

Utilities Water Power $3,436.00

Maintenance $2,640.00

Insurance $1,500.00

Property Tax $3,447.00

Total Expenses $13,423.00

Total Expenses $13,423.00

NET OPERATING INCOME $12,857.00

Returns Analysis

Capitalization Rate 9.89%

Project Cost $130,000.00

Price Per SF $50.00

Debt Amount $104,000.00

Equity Required 20% $26,000.00

Debt Service $7,895.46

Net Operating Income $12,857.00

Net Cash Flow $4,961.54

Leveraged Return on Equity 19.08% $64,022 net worth accumulation

Principal Payment- 1st Year $3,282.67

Return on Equity after Principal Payment 31.71% $66,660.35

DSCR 1.6284033

Year 1 $8,244.21

Year 2 $10,239.54

Year 3 $13,061.54

Year 4 $16,013.54

Year 5 $19,101.54

Thanks in advance for taking the time to look at this deal.

Disclaimer:  We are also starting to look at our 1st multi and we are very conservative....probably will be hard for us to pull the trigger!

One thing we ask for are the actual figures for the past two years.  Do you know when the last roof and mechanical updates were made?  Is the current owner self managing?  We budget 10% for professional management....

How old is the building?  Our bank gives favorable financing for buildings less than 20-25 years in the 4.25 - 4.5 ... more tightly underwriting for older and little higher rate for older....

Keep us posted....  

Amy

Agree with Amy, always get actual figures. Having created the earlier green building retrofit programs for multi-family buildings - numbers provided are usually estimated at best and often self report the details that favor the investment. Some large deals, I ask to see the actual management accounts as part of due diligence. 

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