Advice Analyzing Small Multifamily

1 Reply

Hey BP,

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.

  1. Which method would you use to analyze this property?
  2. What do you guys think of my expenses?
  3. What would you pay for this property?
  4. Am I just looking at this all wrong?

Thank you for helping a noob!

Aaron

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.