Need validation of my calculation on this apartment units deal
I came across a apartment complex in Dallas area and did my learning exercise of cap rate.
Property details as mentioned:
Price: 795K
Units: 12
Occupany ~95%
AGI: 172K
AGE (expenses): 95K
NOI: 77K
HOA: 66K
My Calculations:
Tax rate: 2.82% (total)
HomeInsurance: 0.35%
I just looked up conventional loan at 25% down, added up standard costs, and monthly mortage with principal comes to 10K. Further, estimated 35K in annual expenses (have a suspicion that this is too high), calculations become:
AGI: 172K
Mortgage: 12* (10K-3K principal) = 12*7K = 84K
Annual expenses: 35K
NOI: 53K
So, cap rate would be around 53/795 = 6.95
Assumptions:
1. I will manage the property myself, so no management fees
2. Not sure how assessments impact the costs, so any pointers would be great
3. Any large expenses are not planned in these calculations
From all this, it doesn't sound like a great deal to me.
Can you please review this and let me know if my calculations have some obvious holes in them that I am not looking at - like unknown expenses, costs or income risks? I can point to realtor link but wasn't sure if it is allowed on this site.