Analysis on mulit family how to get it to cash flow

[Daria B.]

Hi-

I'm looking for duplexes, starting small...but of course multi-multi is out there in mass. However, +5 units do come with more things that I need to learn about before just jumping in.

What I'm running across are for-sale owned by investors that have several duplexes.

To hone my skills, I am doing analysis from what I learned about deal analysis, thanks BP community, to see what I come up with. And who knows, it might be a better deal instead of piece-mealing trying to buy 1 or 2 duplexes at a time.

This listing is from an investor (selling through a realtor) who owns 4 duplexes all on the same street. Built 1978 last sold 1996.

I pulled up the addresses using maps.google.com to see the area.

From the pictures, and I know it’s not the same but it’s a start, it looks decent, it's on a cul-de-sac.

I also pulled up the property records (appraisers and tax site) and found the investor purchased all the units at the same time in 1996 (built in 1978) for the same price each $40k.

I didn't bother with looking to see if the investor still has a mortgage on the units, since that $ amount and this amount of time it's likely to be paid for. And according to Trulia.com, the area is all green (good) as it relates to their crime stats.

These are all 2/2 total 1708sq ft (854 @).

Question: Can anyone speak to the history showing on-off market so erratically over the months/years? Does anyone really look at the listing history?

Also, I got this just before it was removed from Zillow.com so now it just looks like 6/1/2015 as a “new” listing.

• 06/01/2015 Relisted $565,000
• 07/02/2012 Relisted $565,000
• 06/29/2012 Delisted
• 01/03/2012 Relisted $565,000
• 01/01/2012 Delisted
• 08/02/2011 Relisted $565,000
• 07/31/2011 Delisted
• 07/08/2011 Relisted $565,000
• 06/30/2011 Delisted
• 06/28/2011 Price Changed $565,000
• 12/01/2010 Relisted $615,000
• 11/30/2010 Delisted
• 10/11/2010 Relisted $615,000
• 10/08/2010 Delisted
• 09/09/2010 Relisted $615,000
• 09/08/2010 Delisted
• 06/27/2010 Price Changed $615,000
• 04/09/2009 Listed $620,000

Question: Do I look at the duplexes as "individual" cash flow, COC, and ROI for the outcome or do I look at all of them for the potential $$$?

Question: How do I do vacancy rate on individual duplexes? I am thinking I need to do 10% on each one?

Current rents ($27300):

• Unit 2 Rent: 575 (6900)
• Unit 3 Rent: 550 (6600)
• Unit 4 Rent: 575 (6900)
• Unit 1 Rent: 575 (6900)

I know this is just information as it was provided by the investor/realtor as part of the ad and due diligence would be to see what other rents in the area go for and to get an actual "rent roll" from the seller.

Tax roll:

$1,939 for each unit according to the tax assessor site…but….I also see “unpaid” so I’m wondering what’s going on with these units.

To the analysis (without 50%):

• 10% PM
• 10% vacancy
• 5% cap ex
• $2000 taxes each unit (4 of them) (i don't know how to determine this since their taxes will differ from what the new person coming in will have to pay)
• $1000 insurance each unit (rough estimate of $1k per yr per unit)
• 10% maintenance
• 20% down with
• 4.8% rate on a 30yr. (this was based on a SFR and I couldn't get in touch with the bank to find out what multi rates were).

1. Gross: $2,275
2. Vacancy: $228
3. GOI: $2,047
4. Expenses: $1,568
5. NOI $479
6. PI:$2,393
7. Cash Flow: -$1,914
8. Cap Rate: 1%
9. COC:-17.7%
10. ROI:-30.7%
11. Rent-2-Value: 0.4%

To the analysis (with 50%):

• 10% PM
• 10% vacancy
• 5% cap ex
• 10% maintenance
• 20% down
• 4.8% rate on a 30yr. (this was based on a SFR and I couldn't get in touch with the bank to find out what multi rates were).

1. Gross: $2,275
2. Vacancy: $228
3. GOI: $2,047
4. Expenses: $1,138
5. NOI $909
6. PI:$2,393
7. Cash Flow: -$1,484
8. Cap Rate: 1.9%
9. COC:-13.7%
10. ROI:-26.8%
11. Rent-2-Value: 0.4%

This just seems horrible at $565k…

Thanks everyone….