Need help evaluating 4-plexes in Uptown, Minneapolis
I'm working on my first multi-family investment deal since moving back to Minnesota from Wisconsin in order to start growing a portfolio locally. I found two separate unlisted 4-plexes in Uptown. Ideally, I would house-hack one of the 4-plexes, use the Home Possible Program to put 5% down and potentially purchase the second one conventional if each of the deals worked out (using the backing of a seasoned family-friend investor to assist w/ financing). Both do not have asking prices and both owners want to "cash-out" but are also worried about cap gains tax, more questions on that below.
Here are some assumed numbers:
Fourplex #1:
2BR - $1750
2BR - $1400
Studio - $800
Studio $750
Rental Income = $4,700
Vacancy 5% (assumed)
Net Rent: $4,460
Parking income = $300/mo
Washer/Dryer revenue = $1,000/yr or $84/mo
Utilities: $13k/yr
Insurance: $2,100/yr
Taxes: $8,300/yr
CapEx & Repairs: $250/mo
4 year old roof and boiler
Financing: Assume 5% down, i = 4.5%, 30yr, closing costs of 2% w/ PMI of 1%
No commissions
Fourplex #2:
1BR - $800
1BR - $850
1BR - $850
1BR - $925
Rental Income: $3,425/mo
Vacancy 5% assumed
Net Rent: $3,254
Parking income: $270
Washer/Dryer: $500/yr or $42/mo
Utilities: $7,700/yr
Insurance: $1,500/yr
Taxes: $6,300/yr
CapEx & Repairs: $250/mo
4-year old roof, windows, siding
Financing: assume 5% down, i = 4.5%, 30yr, 2% closing costs, 1% PMI
No commissions
My questions are as follows:
- What should my offer price be on each property and what is the highest price I should be willing to pay for the properties? My threshold is 10% COC and $100/mo/unit cashflow but understand there is more potential home-hacking here and I can't low-ball in this market.
- How do my assumptions look above based on the market?
- How should I finance the properties if I wanted to buy both? (House-hack one and conventional for the other? Can you bundle your loan in that case?)
- The sellers want to "cash-out" but are worried about Cap Gains Tax (no 1031 either). Should I ask for seller financing to defer this? Any other creative options?
Thanks in advance for any help/suggestions.