[Calc Review] Help me analyze this deal

[Jared Coley]

Let me know what you think BiggerPockets!

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[Ryan Blake]

@Jared Coley I looked at this for awhile because I want to see a great deal but I am not sure that I do with this one. It may still work for you but these are the reasons I am giving:

1) I would want to see around $125 in positive cash flow / unit. At $788 you are only at $98 / unit.

2) I see you have only 10% listed for repairs & maintenance and nothing for cap ex. I think you might be a little light based on my guess at the age of the building. It looks to be about 30 - 40 years old which means HVAC and roof may already be on their second rounds and a third could be coming up quickly. I would probably have 8% for repairs & maintenance like broken windows, snow removal/landscaping, and other small repair items. I would also have 7% or more of capital expenditures like a roof, paint, new HVAC, repaving the parking lot, upgrading facilities, etc depending on the amount of differed maintenance from the prior owner. What big expenses are coming up in the future. I know there will be some if you are only planning a rehab of $1k / unit.

3) And this is probably the biggest one, you are missing about $480 / month in a property management fee (roughly 10% of gross rents). If you are going to manage yourself you should still budget for your time. With 8 units and the average renter in a C class unit calling almost twice per month you can expect to get a call every two days. I think you should plan on compensating yourself for it.

I hope this works out for you but just wanted to share my observations in hopes of it giving you extra things to think about. Some of this could already be planned for and I am just not seeing it. I wish you luck and hope this one is a home run for you and if not that you find one soon.