help me anaylze this 5 unit deal

4 Replies

hello BP. I need some help evaluating this 5 unit deal. I never dealt with commercial yet. I came across this on loopnet. my fiance which is a realtor tried to call and no answer then she text the listing agent and the agent said the deal fell apart friday. I don't know the reason yet it was contingent on inspections. I haven't seen the property yet from the look of pics looks like some shingles are missing. as far as numbers the listing agent sent over the rent roll. can someone give me some feedback on this. 2 units are vacant. list price is 84,500... thanks

Hello Will. You are going to need to provide a lot more information to evaluate the deal.  Can you describe the property a bit?  Here are some basic things that would be good to know:

 - What is the makeup of the units.....i.e. # of bedrooms per

 - What is the area like?  What are typical rents in the area?  Can rents be raised?

 - Does the property need work?

 - Why are 2 units vacant?

 - Is the listed rental income based on all units being rented or only 3?

 - Are you planning on financing?

 - Who is paying the utilities? I only see Water/Sewer listed.

Once you start to gather some of the information, an evaluation can begin.

Originally posted by @Michael Broudy :

Hello Will. You are going to need to provide a lot more information to evaluate the deal.  Can you describe the property a bit?  Here are some basic things that would be good to know:

 - What is the makeup of the units.....i.e. # of bedrooms per

 - What is the area like?  What are typical rents in the area?  Can rents be raised?

 - Does the property need work?

 - Why are 2 units vacant?

 - Is the listed rental income based on all units being rented or only 3?

 - Are you planning on financing?

 - Who is paying the utilities? I only see Water/Sewer listed.

Once you start to gather some of the information, an evaluation can begin.

thanks for responding mike. 3 units are 2/1 and the other 2 are 1/1. The agent said rent 325-600 depending on unit. which in undermarket 1bedroom goes for $500 and 2 bedroom-$650. so rents can be raised. The area is downtown on the lake and a few blocks from police station. I don't know about repairs yet. I will know more info tomorrow. I message seller on FB to see if will owner finance owner never got back with me yet. I do plan on financing it but haven't talk to a commercial lender yet . owner pays water and trash. tenant pays all other utilities. The agent said two units could of been rented but wasn't because of the previous offer. Agent said last year he had one unit vacant for month and other vacant for two months. The 3 tenants now have been there 2-11 years.

At quick glance the NOI is around $14,000. When you factor in financing you are looking at maybe $4,000 - $5,000 in profit left over. That is without property management or any deferred maintenance, etc. In my opinion, you would definitely need to have increased rents and potentially a lower purchase price to even consider the deal.

Originally posted by @Michael Broudy :

At quick glance the NOI is around $14,000. When you factor in financing you are looking at maybe $4,000 - $5,000 in profit left over. That is without property management or any deferred maintenance, etc. In my opinion, you would definitely need to have increased rents and potentially a lower purchase price to even consider the deal.

thanks. I do plan on increasing rents an also offering lower than the 84,500.00. especially when the deal just fell through. thanks again for your input.