I currently have 3 SFR's and a recent duplex. I am looking to scale up, and very interested in this 10-unit. However, I have never analyzed a pro-forma before. Hoping more experienced investors can take a look at this and see if their is anything that seems off, and if this seems like a good deal at the listed price of $479,000. Also, some questions that I can/should ask the seller.
The image didn't come through, maybe try posting another format
I am having trouble uploading the image.I will bullet point everything they have included. Thanks so much!
- Purchase price $479,000
- Current cap rate 7.59%, stabilized 10.3%
- Current GRM 6.12, stabilized 5.8
- Current rents $6,865, Pro-forma rents $7,250
- Vacancy loss/collections at 5% ($4,119)
- Current total expenses $41,894, stabilized expenses $33,303
- Current NOI $36,367, Stabilized NOI $49,347
- Stabilized cash flow $25,541 / 21.33%
Also, below are questions that I have sent to the seller.Please let me know if I have left anything off as this is my 1st Pro-Forma that I have every analyzed.
Questions for Seller:
- Expenses seem extremely high.
- Garbage is $93/month. How many dumpsters are at the property and how often do they pick up garbage?
- Landscaping is $3,985 for the year. What does this include?
- Snow removal is $6,099, seems extremely high. Was this for 2016?
- Are the Utilities paid for by the tenants?
- Why is no money budgeted for reserves or management?
- Current expenses listed at $36,367, but yet it says 2016 actual is $26,267?
- Vacancy and loss is listed at $4,119.Was this from vacancy or from tenants not paying rent?
- Any evictions in 2016/2017?
- Is any money reserved/budgeted for repairs and CapEx?
- Based on these figures and 8% for repairs and 8% for CapEx, it is a 6.75% Cash on Cash return and yearly cash flow of $9,073.20 with a Cap Rate of 6.73%.