Multifamily Deal Analysis: Saratoga NY

[Steven Luttman]

Multifamily Deal Analysis

Location: Saratoga County, NY (1 hour north of Albany, NY 20 minutes south of Lake George, NY)

Why this area: Familiarity, as I already own rentals in town. The county is growing in population, relatively low taxes and proximity to cities of interest Saratoga Springs & Glens Falls

Property: 3 units totaling 5 beds and 3 baths

Acquisition method: Seller financing. 2 years of interest only payments, 10% down payment. Property was uninhabitable at time of purchase, so minimizing upfront & monthly expenses was critical until units were brought back to life.

Initial plan:
Purchase $135,000
Rehab: $75,000
ARV: $230,000

What actually happened:
Purchase: $135,000
Rehab: $90,000
ARV: $180,000 (11/2023 appraisal) $210,000 (10/2024 appraisal)

How the building performs today:

Rents: $3,050

PITI: $1,450
Management: $250
Water/sewer: $75
Repairs: $150
Snow/lawn: $75
Trash: $0
Utilities: $0
Vacancy: $200
CapX: $150
Cash flow: $700

Exit: 30 year fixed rate 75% LTV cashout refinance. My mortgage company Knollhaven Capital was able to broker the loan.

Pain points:

1) Not obtaining multiple quotes from contractors on certain portions of the project. Availability of a contractor does not supersede accountability. This simple task likely cost me $10,000

2) Small markets can produce wild fluctuations in values. A fully renovated price per square foot of $110 was very doable based on 12 months of sales preceding the purchase. When the building was appraised for the refi however, those sales had become stale and were replaced by only a handful of transactions, unfortunately all at a much lower price point/quality level.

3) Small markets can limit your lending options. Classified as "rural" by some DSCR lenders made it difficult to make institutions compete against each other.

Fun fact: Disputing an appraisal value requires the appraiser acknowledging they made a mistake. Good luck!