New Guy Needs help with multifamily analysis
I found this deal which is actually for 2 properties with a combined total of 125 units. This is priced at $2,800,000 . The listing says it has a cap rate of 12.84%. I divided the NOI by the derived cap rate(from the band of equity formula) and correct me If I'm wrong here which I probably am, but it says that the maximum purchase price is $4,494,500. I'm not sure if this is correct. I just trying to apply these formulas that I have learned. There is also a cost by the buyer of $30,000 to install security alams. Should that $30,000 be subtracted from the price of the property? And In my calculations, I got $359,560 for the NOI, however in this ad, they list $359,520 as the NOI. Which one is correct? Thank you for your help. Here is the data:
Location: Belle Glade, Florida
PAHOKEE PROPERTY
52 Units
8 - 2/2 @ $400/month
43 - 1/1 @ $300/month
1 - eff @ $200/month
Current Vacant 14 apartments
INCOME
Total Gross Rent $195,600/year
Laundry Income $12,000/year
EXPENSES
Taxes $22,400/year
Insurance $10,000/year
Management $12,000/year
Utilities $12,000/year
Tenants pay own utilities and provide own appliances.
TOTAL NET INCOME (excluding vacancies and repairs)
$151,200
BELLE GLADE PROPERTY
73 units
current vacant 17 apartments
17 - 2/2 @ $400/month
56 - 1/1 @ $300/month
INCOME
Total Gross Potential Income $283,200/year
EXPENSES
Taxes $39,600/year
Insurance $ 11,640./year
Utilities $3,600/year
Management $20,000/year
Tenants pay own utilities and provide own appliances.
TOTAL NET INCOME (excluding vacancies and repairs)
$208,360
Note for Belle Glade: Owner would have to install fire alarm system (cost estimate $30,000)
Its actual 4 builds
Financial Summary
*
Actual
* Net Operating Income
$359,520