Multi unit deal
Hello, I currently own 4 rental properties and have an opportunity to purchase 8 properties from another investor
On the 8 properties, there is 4500 MRR and has a list of 295k. That comes to 1.52 towards the magic 2 number. I am thinking about offering 250k with a target of 270k. Those calculations are ~1.79 and ~1.68.
If i hit the 270k, monthly payment on that would be 1702 (assuming 4.95% on 15 year) and with a high expense rate of 43% (8% vacancy, 10% repairs, 10% management, 15% tax/insurance) that would end up netting around 10,350 annually (calculating out all of debt service), and put the ultimate cap rate at 11%.
These numbers seem like they would work, my worry is this is a bigger deal for me, i have baught my other 4 across 3 deals over many years. Also, a few of the houses are rough and will need roofs over the next few years and some are pretty old as well (built in 1920/1900). None are in good school districts/good areas.
The investor is getting out due to a move. I have purchased 2 of his properties previously and they have cashflowed really well.
Any thoughts?