7 unit multi-family

[Cory E.]

There's a 7 unit multi-family in my area for sale I would like a 2nd opinion on. It just expired from the market @ $185k, it was on the market for 456 days it's assessed at $145k. I was running some comps in the area and the owner is going to re-list. We think the reason it didn't sell is because it was priced a little high, it should be around $150-160k. If the price does go down to the $150k area I may be interested. I haven't seen the inside of the house, I drove by and the outside isn't too bad, could use a new roof in a few years. 6 out of 7 units are rented totaling $3000 and the empty unit could rent for 550-650. I have 20% to put down and taxes are $2300 a year and I would be managing the property myself, and all utilities are paid by tenants. Any advice is greatly appreciated.

[Aaron Montague]

@Cory E.

This property passes the 2% rule nicely. Now it's time to look at the numbers in depth.

I would find out exactly how much the following expense are going to cost you each month. "The tenant pays" is a good answer as well. Put those numbers up here and I'll tell you what I would pay for the place.

Taxes

Sewer and Water

Trash

Heat/Utilities

HOA

Cap Ex and Ops

Insurance

Mgmt Fee - as a % (general consensus here on BP is 10%. include it even if you think you are going to self manage)

Vacancy- as a %. (8% represents 1 vacant month/unit/year)