Updated over 7 years ago on . Most recent reply
Help with 5-unit deal analysis
Hello BP Community,
I have analyzed this deal myself (using calculator!!) and it does not look like the right deal for me and my investing objectives.However, this is the first multi-unit I have seriously looked at and want to make sure I am making some of the correct assumptions; which are below. Maybe I am being too conservative in some of my estimates or even forgetting something big.If anyone has any suggestions or things I should look at differently, I appreciate the input!
The property is a 5 unit building with the following information:
- Rental income is $4,000 per month or $48,000 per year total
- Taxes are $375 per month or $4,500 per year (this is higher than current but factoring in that they will increase)
- Estimated insurance is $200 per month or $2,400 per year
Expenses:
- Vacancy 8%
- Management 10%
Other expenses
- Landlord pays water at $400 per month or $4,800 per year
- Realize this could be a cost savings in the future, but want to analyze as is
- General maintenance (including minor repairs on property) including grass and pest control estimate at $300 per month or $3,600 per year
- Capital reserves for Cap ex (appliances, windows (52 windows on building), roof, siding, etc. which I based on building a capitalization table based on useful life of items and number of units) at $460 per month or $5,520 per year
Loan:
- All in after down payment the loan would be for $300,000
- Assuming 7% interest rate
- Amortized over 20 years
- Thus comes out to $2,325 per month or $27,900 per year
Summary
- Income Per Year:$48,000
- Property Exp. Per Year:(-$6,900)
- Expenses Per Year:(-$8,640)
- Other Exp. Per Year:(-$13,920)
- Debt Service Per Year:(-$27,900)
- Total per Year:(-$9,360)