8 fam N of Boston, bow wow or is my math wrong? 1st X comm
Investor · Haverhill, MA · Member since 2014 · 12 posts · 2 votes
Dear BP community,
I saw an 8 family today that I liked, but my math tells me it's not for me. The asking price is $1.1M. On the debt service, I was going to leverage a home equity line for the down payment with a 2.5% interest rate, but for analysis purposes I assumed debt service on the entire asking price at 4%. I can't get it to cash flow, am I missing anything? I feel pretty strongly that the expenses are reasonably solid. I've based my rental income on existing cash flow ... the seller suggest rents can be raised but figuring on actuals made more sense for me of course!
This is my first time doing analysis on a commercial property so thank you all in advance for your input, it's greatly appreciated.
-Jeff
| Revenue | monthly | yearly |
| Rental Income | $9,570 | $114,840 |
| vac rate @ 5% | -$525 | -$6,300 |
| Net rental income | $9,045 | $108,540 |
| Gross income | $108,540 | |
| Expenses | ||
| Property Taxes | $1,010 | $12,120 |
| Insurance | $508 | $6,096 |
| Prop mgmnt @ 10% | $905 | $10,854 |
| water/sewer | $168 | $2,016 |
| gas | $178 | $2,136 |
| electric | $140 | $1,680 |
| snow removal | $175 | $2,100 |
| trash removal | $10 | $120 |
| landscaping | $200 | $2,400 |
| M&R | $464 | $5,568 |
| Total Exp | $45,090 | |
| NOI | $63,450 | |
| Debt Service * | $5,252 | $63,024 |
| Cash flow? | $426 | |
| return on investment | n/a | |
| capitalization rate | 5.77% | |
| cash on cash return | n/a | |
| * assume $1.1M @ 4% for 30 years |
