[Calc Review] Help me analyze this deal

Member since 2023 · 1 post · 0 votes

This is my first post here. I'm fascinated by investing and following the prompting to just jump in! I'd like to start with a multi-family unit. I found what looks like a good deal near me. What do you think. If you like it, I'd love to get a team together to make this happen. Who wants to fund it? If not this property, then something better!

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Andrew BoscoBusiness Member
Rental Property Investor · NH · Member since 2023 · 445 posts · 419 votes
3y
Every location is different. By me, I only pursue 200 dollars per door with a cap of above 7%. It just depends how you stabilize the property and common metrics in your area.
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Andrew Bosco - Candor Investment Group529 Reviews
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Ke Nan Wang
Developer · St. Augustine, FL · Member since 2018 · 311 posts · 384 votes
3y
Your margin seems very small. Any Capexp can easily eat a year of your profit if this is an older property. So you buy this for the long game going for appreciation and debt paydown.

Each area is different but $23 a month for property insurance, is that really what you are paying in California? That's insanely low. In Florida, our insurance premium with a new construction metal roof is $700 a year. Most properties are hovering somewhere between $1200 to $2000 a year depend on the age of the property and roof condition.

How many units are in this multifamily?

Management fee usually is a little more than 10% because most property management company I know charge a tenant placement fee that's equivalent to somewhere between 50% to 100% of first month rent (depend on the rent of course). So you should factor in about 12% to 15% management fee unless you've already negotiated the 10% PM fee with a property manager. If the property is local, and it's 4 units or less, I strongly suggest you do DIY property management to save some expenses. Definitely read books and subscribe to podcast and learn about best practices. Once you know what to do, it's not that hard at the small scale and it's not that much work. In that case, you are giving out that 15% away. I would say try it for the first year and if you don't like it, then hire a PM and now for one, you appreciate what they do and second, you know the key questions to ask them.
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