700k multifamily, 14 units, fully occupied with rents around 700$ for new units. With a little renovations I estimate it would cash flow 10k gross income per month. Good deal?
Hey Shankar, my first thought is that if you're having to ask random investors online if this is a good deal, are you trying to bite off more than you should? Could you find some local investors to ask? and what does "a little renovations" mean? are you accounting for all maintenance, CapEx, and vacancy costs too? what would be the NET income after accounting for all of that? Having a gross income of $10k a month won't matter if all the operating expenses (maintenance, CapEx, vacancy, taxes, insurance) and financing costs (principle, interest) total $10k a month too. If you haven't yet, I would suggest running this through the BiggerPockets calculators and then share those results with us (go to "tools" at the top of the site, then "Rental property calculator"). Doing that will help us give you specific feedback on what numbers may be good or bad.
Hey Shankar, my first thought is that if you're having to ask random investors online if this is a good deal, are you trying to bite off more than you should? Could you find some local investors to ask? and what does "a little renovations" mean? are you accounting for all maintenance, CapEx, and vacancy costs too? what would be the NET income after accounting for all of that? Having a gross income of $10k a month won't matter if all the operating expenses (maintenance, CapEx, vacancy, taxes, insurance) and financing costs (principle, interest) total $10k a month too. If you haven't yet, I would suggest running this through the BiggerPockets calculators and then share those results with us (go to "tools" at the top of the site, then "Rental property calculator"). Doing that will help us give you specific feedback on what numbers may be good or bad.
If you can keep all your expenses around $7-8k a month. With rents being at 10k and expenses at 7-8k your true cash flow would be 2-3k. since this deal is finished already and you aren't doing much rehab I wouldn't expect to get a home run on this one. Be sure to account for all expensed ike Michael just said. You'll also want good reserve account. Expense are Mortgage, Taxes, Insurance, Utilities, Water/Sewer, Snow Removal, Landscaping, Maintainece, Cap Ex. So Maintenance and Cap Ex are basically going to sit in an account. I would suggest you still keep them there. Things like the roof windows and renovating new units after tenants leave. Also sinks clogs toilets clog so you will need money for those types of items. Some investors do Percentage others may do a straight cost per door. Whatever works for you just make sure you have extra money for items like that. I can't speak on if it's a good deal or not because that is relative to the person. Some investors may like this others may not. Some investors keep $250 for cap ex while others keep $50. you have to find what works for you. I would suggest being more conservative at least in the beginning so you don't get caught down the road!
Anything is a good deal if you can make it cash flow. I would look into short and midterm rental for a few of the units and see if you could boost the monthly income that way. As one or two people move out go renovate the unit and see if you can maximize the income. Value add will also help you refinance it later on and take cash out.
What would you be putting down? I am assuming roughly 20-25% down payment? I would request to see the leases and when they expire, and get an idea of how much the remainder units need in renovation budget... From initial look, it seems like an "okay deal" if it really truly has 10k in gross monthly income. I would try and keep my monthly nut ( mortgage + all operating expenses ) around 6k/month and then plan for CapEx and some vacancy as well. If you could truly cash flow around 2-3k month, and you could fetch at least a 20% annual cash on cash return then it may be worth pursuing.