I am analyzing my first multifamily property currently although I do own a few single family properties currently. This property is a 6 unit (1 - 3bd, 2ba; 4 - 1bd, 1ba; 1 studio) and is adjacent to a local college campus. It is a brick 1 story built in 1955 and the owner is asking 225k. I performed my analysis as follows.
The 1st column is what was sent as proforma, the 2nd is adjusted based on what I believe to be actuals after visiting (2 units vacant) and an expense added for the mowing and plowing. I also increased the taxes to what I would be paying when the property is reassessed at a new purchase price. The final column is representative of what I believe I could operate the property at. The total ROI and cashflow (~112/month/unit). Furthermore, if I look at this from a different perspective, we could assume I pay him a very generous cap rate (for South Bend) at 8% on the adjusted proforma and subtract the cost of rehab (50k) we would end up an offer which is highly unlikely to be accepted of ~110k.
I am looking for feedback on a couple things here.
- Which method would you use to analyze this property?
- What do you guys think of my expenses?
- What would you pay for this property?
- Am I just looking at this all wrong?
Thank you for helping a noob!
Just saw this, would love to connect. I am under contract with an 8 unit in South Bend and have 23 units up in Northern Michigan. Ill PM you and we should get on a phone call.