Need thoughts on my very first offer(s)
Pending me finding my appropriate funding that I am looking for, I am ready to put in my very first offers. They are both for buy and hold and multifamily units in Columbus, Ohio. Would love to hear everyones thoughts:
Property 1:
- 3 - 4 unit buildings (12 total)
- asking price $305,000
- rents are only $450 per unit but it is 100% occupied ( I am assuming the low rents accounts for the full occupancy)
- Taxes - $740/month total
- Insurance - $200/month approx.
- Property Management - $540 (assuming 10% for this, it is currently self managed by the owner)
- Little to no rehab required as a lot has been done in the past couple years by existing owner.
- I will be borrowing for 90% of the cost and my monthly cost on that would be approx. $1,100.
- I will put away 10% for vacancy and 5% for maintenance per month also.
Let me know your thoughts on the numbers and what else I can give here to help people review this.
Property 2:
- 2 - 4 unit buildings (8 total)
- asking price $300,000
- rents are $530 and it is also 100% occupied. These are newer buildings (1986) and have all amenities included.
- The only rehab required seems to be shingles on one and it is not urgent to my knowledge.
- Taxes - $653/month
- Insurance - $125/month
- Property Management - $425
- 10% for vacancy, 5% for maintenance.
I appreciate any and all comments, thanks guys!!
Most Popular Reply
Hey Shaun,
I recommend allocating more like the following:
-15% property management (once you include all the extras, such as leasing fees, it will be more like 15 to 20% since your rent is so low).
-15% for maintenance (this number is irrespective of rents and is more appropriately tied to the sq footage; 15% is a guess).
-5% for capital improvements (capex).
Those last 2 numbers are based on average expenses for Columbus multifamily properties that I've observed over a number of years.
Don't forget there are other (small) expenses such as legal, etc.
-Peter