Would really appreciate a deal analysis for a 5-unit multi family

Question

Hi BP community,

I have been investing in single-family and multi-family properties in class C neighborhoods in Cincinnati for the past 10 years, with great success. Up until now I only bought properties using full cash. I want to buy my next property using finance, where the cash flow pays for the monthly debt, and still remains cash flow positive.

Deal details:

5 units multi-family, 1 bed/1 bath each. Building was built in 1972. Roof in good shape. Needs foundation reinforcement work for $15,300.

Each apartment can be rented at least for $825/mth (can potentially go to $900 but I'm being conservative). So total monthly revenue on full occupancy is $4,125/mth or $49,500 annually.

Current occupancy 4/5 units with a total monthly income of $3,075/mth

Selling price: $280K

Rehab cost: $20K

ARV: $300K

Closing costs: $5K

Loan cost: $10K, amortized

Down payment: $80K

Loan: $200K, 30 yr fixed @ 7.15% APR, paying $1,418/ mth or $17,652 annually

Total capital invested: $105K (down payment + rehab + closing).

Annual tax: $3,400 annually

Mgmt: $150/mth, $1,800 annually

Insurance: $1,360 annually

Utilities (water + heat): $700/mth (tenant pays electric), $8,400 annually

Expected maintenance: $400/mth, $4,800 annually

Vacancy: 7% = $3,465 annually

NOI (after paying the monthly debt payment): $8,623 ($718.5 / mth)

Cash on cash = 8.21%

How would you rate this investment opportunity?

I need to make the decision very soon.

Thanks!

Alex Morales · Answer

Your numbers look solid for a C-class Cincinnati 5-unit, especially given your 10 years of local experience. A few observations:

**What looks good:**

- 8.21% CoC in today's rate environment is respectable, especially with conservative rent estimates

- $825/unit for 1b/1b in Cincinnati C-class is realistic (and the $900 upside is achievable with light updates)

- Foundation work at $15.3k is factored in - that's often a deal-killer people underestimate

- Your utilities expense at $700/mth is properly accounted for (water/heat costs catch a lot of investors off-guard in older MF)

**A few things I'd stress-test:**

1. **Vacancy at 7%** - For C-class 5-units, I'd personally model 10% to be safe. That's $4,950 annually, adding ~$1,500 to your expenses.

2. **Maintenance at $400/mth** - For a 1972 building, that's reasonable but on the lower end. Especially with the foundation work needed, I'd budget closer to $500-600/mth for the first couple years.

3. **Cap-ex reserve** - I don't see this broken out. For a 52-year-old building, I'd set aside another $200-300/mth for big-ticket items (HVAC, water heater, future roof replacement).

**Re-running with conservative assumptions:**

With 10% vacancy + $600/mth maintenance + $250/mth cap-ex, your CoC drops closer to 5-6%. Still positive, but tighter.

**Bottom line:** At $280k for a 5-unit cash-flowing day one in Cincinnati, you're not overpaying. The real question is whether the foundation work has any surprises once they open it up. Get a structural engineer's assessment before closing if you haven't already.

Given your track record with cash purchases, you clearly know the Cincinnati market. Tools like PropLab or DealCheck can help quickly stress-test different scenarios (vacancy, rent growth, refi assumptions) to see how the deal performs under various conditions.

What's driving the seller to sell at this price point?

Jonathan Cannon · Answer

This is a solid, well thought-out breakdown — especially coming from an all-cash background moving into leverage.

At a high level, the deal looks like it can work, but it’s fairly tight once you layer in realistic operating assumptions.

A few things I’d look at more closely:

• Your utilities at $700/month ($8,400 annually) are a meaningful drag — if there’s any path to reducing or partially shifting that, it would materially improve the deal
• The maintenance and capex assumptions may be a bit light for a 1970s asset, especially with known foundation work
• With only ~$700/month projected cash flow, even small variances in vacancy, maintenance, or expenses could compress returns quickly
• Make sure taxes are fully stabilized at the purchase price — even smaller increases will impact your margin

On the positive side:

• Basis seems reasonable for a 5-unit
• Rents appear achievable based on your conservative estimate
• You’re not relying on aggressive appreciation or proforma upside

Overall, I’d say:

👉 It works, but it’s not a wide-margin deal — execution and expense control will matter.

Curious — have you stress tested what happens if expenses or vacancy come in slightly higher than expected?

Kimberly Kirkman · Answer

In Cincinnati specifically, I’d want to look closely at:

• Current rent vs. market rent (unit-by-unit)

• Deferred maintenance and capital expenditure schedule

• Utility structure (separately metered or owner-paid?)

• Realistic vacancy assumptions — 5% may not be realistic in certain neighborhoods right now

I’m seeing tighter margins on small multis compared to 2–3 years ago. Pricing discipline matters more than ever.

If you’re comfortable sharing numbers, I’d be happy to break down cap rate vs. cash-on-cash assumptions.

Jaycee Greene · Answer

Hey @Assaf Kaufman , welcome to the BP Forum! As long as your numbers are solid AND you're OK with a Class C neighborhood, I believe this is a good deal. Have you looked into doing Section 8? Not sure of the zip code on this, but for the 45231 zip code, the rent for a 1BR is over $1,100. FWIW, I think your NOI estimate might be on the low side and you can probably get a better interest rate than 7.15%.

Assaf Kaufman · Answer

Thank you Alex M. for your analysis!Some responses:

1. I am an experienced cash buyer in the Cincinnati market. I bought the building next to this one, and I have renters for a 1bdrm/1bath paying $900/mth. so $825/mth is conservative.

2. I lowered the purchase price to $239K. The foundation work required will cost $22K.2 structural engineering companies have evaluated it already. I will also need to spend around $14K for units rehab and plumbing work.

3. My vacancy rate for the past 10 years was 5%. So 7% is on the conservative side. I am buying this property with only 2 units occupied, so vacancy will be higher in the 1st 2-3 months.

4. for this property the roof is 3 years old, the electric panel is updated. But I agree I should increase the expected maintenance and/or capex to at least $600/mth.5. The seller is obviously a tired landlord. He has a horrible mgmt company. They didn't maintain the property properly, got many citations, didn't fill the units, etc. I already have my eco-system in Cincinnati to get much better results.

Thanks again,

Assaf

Assaf Kaufman · Answer

Thank you Alex M. for your analysis!Some responses:

1. I am an experienced cash buyer in the Cincinnati market. I bought the building next to this one, and I have renters for a 1bdrm/1bath paying $900/mth. so $825/mth is conservative.

2. I lowered the purchase price to $239K. The foundation work required will cost $22K.2 structural engineering companies have evaluated it already. I will also need to spend around $14K for units rehab and plumbing work.

3. My vacancy rate for the past 10 years was 5%. So 7% is on the conservative side. I am buying this property with only 2 units occupied, so vacancy will be higher in the 1st 2-3 months.

4. for this property the roof is 3 years old, the electric panel is updated. But I agree I should increase the expected maintenance and/or capex to at least $600/mth.5. The seller is obviously a tired landlord. He has a horrible mgmt company. They didn't maintain the property properly, got many citations, didn't fill the units, etc. I already have my eco-system in Cincinnati to get much better results.

Thanks again,

Assaf

Assaf Kaufman · Answer

Thanks for your replies!

Arman Ahmed · Answer

In general, off-market small multifamily deals across the Midwest can still make sense in today’s environment, but they really come down to how clean the execution is rather than chasing aggressive projections. The strongest opportunities I’m seeing tend to be properties with light to moderate value-add, straightforward layouts, and owners who are motivated enough to be flexible on terms, not just price. When those pieces line up, it creates room to stabilize the asset, absorb higher financing costs, and still hold long-term without relying on perfect conditions. I’d focus less on whether a deal looks great on a spreadsheet and more on whether the off-market nature gives you leverage—clean underwriting, realistic expenses, and the ability to improve operations over time. In the Midwest especially, patient buying and disciplined assumptions usually outperform flashy deals found on the open market.

Would really appreciate a deal analysis for a 5-unit multi family

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