18-unit duplex portfolio under contract at $1.88M — would you buy this?

Question

Looking for feedback from experienced multifamily/duplex investors.

I'm under contract on 9 duplexes / 18 units spread across three smaller towns close to metro markets.

Year Built 1993

Purchase price: $1,880,000Price per unit: $104,444Current gross rent: ~$249,840/yearCurrent operating expenses: ~$99,151/yearCurrent NOI: ~$150,689Going-in cap: ~8.0%

Based on current market rents, I believe rents can eventually increase by roughly $36,000/year, producing approximately $31,000–$32,000 of additional NOI after normal variable expenses. That would put stabilized NOI around $182,000 and yield on cost around 9.7%.

I'm purchasing cash and plan to refinance after closing, likely around $1.2M of debt on a 30-year amortization.

My biggest diligence items right now are roof/HVAC ages, sewer scopes, maintenance history, insurance claims, tenant ledgers, utilities, deposits and verifying actual expenses.

Questions for experienced investors:Would you consider an 8% going-in cap / ~9.7% stabilized yield compelling enough for these smaller markets? What expense or reserve assumptions would you change? At $104K/door, does this look like a good deal, a great deal, or am I missing a major risk?

Allison Machazek · Answer

Hey Nathan, on verifying expenses, I’d request a 12-month report broken out by duplex, with supporting invoices and payment records. A combined total can hide one property’s recurring repair problem. I’d also compare the rent roll with actual collections and reconcile the security-deposit ledger before closing. For the expense review, separate recurring operations from major replacements, then identify costs that could change under your ownership, such as insurance and management.

Have you received property-level financials, or only a consolidated report for all nine duplexes?

Nicholas L. · Answer

@Nathan Ante

looks like you got 2 responses written with AI. cool.

my answer: no. it sounds like you're saying you'd have over $700K sitting in this after you refinance, possibly more. my goal with my investments is to add value such that i have little to no cash sitting in deals. otherwise you're better off in other asset classes with more liquidity.

do you already have a portfolio or is this your first foray into real estate? happy to chat further,

-not written with AI

Hossein Sharifi · Answer

At face value the going-in 8% and ~$104k/door look workable — but I'd underwrite the refinance, not the purchase price.

Rough debt check on your $1.2M refi plan (ballpark 6.5% / 30-yr): payment lands around ~$7.6k/mo ≈ $91k/yr. Against today's $151k NOI that's ~1.65x DSCR — fine if NOI is real. Against a stress case (vacancy +5 pts, insurance +20%, one roof this year) that DSCR compresses fast.

What I'd change or verify before calling it "great":

1. Expense ratio is ~40% of gross — confirm insurance quotes today for 18 doors across three towns (not seller's T12)

2. CapEx: roof/HVAC ages on every building, plus sewer scopes — scattered 1993 stock is where one surprise wipes the year-1 cash

3. Rent upside: only count units with expired leases + comps you can defend; don't bank $36k until you have ledgers

4. Exit liquidity: three small markets = thinner buyer pool when you want to sell or cash-out again

I'd buy an 8% going-in in secondary markets if (a) insurance is locked, (b) CapEx reserve is funded up front (I'd want 3–5% of purchase sitting for year-1 roofs/HVAC), and (c) the refi DSCR still clears 1.25x on trailing NOI, not pro forma. Price/door alone doesn't tell you if the debt works.

Mark Updegraff · Answer

@Nathan Ante Have you broken the numbers out by duplex? I’d want to see whether all nine hold up individually or a couple of good ones are carrying the rest.

Nine buildings in three towns is a lot of roofs, heating systems and trips for whoever handles maintenance. We manage a few hundred units in Rochester, and one problem building can eat up a surprising amount of time and money.

I’d run it at the current rents first, with actual insurance quotes and a repair budget for each building. The $36k upside would be nice, but I wouldn’t want to need it to make the purchase work.

Have you had a lender size the refinance using today’s income? That’s something I’d want a pretty good handle on before putting up the cash.
- AI fueled with 15 years of proprietary data as an operator, broker, and property manager.

Mark Updegraff · Answer

Oh no! AI being used to help people post on a forum? How dare they. Lol

Nicholas L. · Answer

@Mark Updegraff

maybe the OP will let us know which posts were helpful and which weren't. or maybe they'll never post again. we'll see.

Ashish Acharya · Answer

Nathan, I like that you’re looking at this based on both the current NOI and what the property could realistically produce after stabilization. At $104K per unit, I’d be less focused on whether the 8% cap rate looks good on paper and more focused on whether that $31K–$32K of additional NOI is actually achievable.

With nine duplexes across three towns, I’d stress-test the rent increase, vacancy, repairs, insurance, property taxes, and CapEx separately rather than relying too heavily on the stabilized projection.

I’d also look at the tax side before closing. On an 18-unit acquisition like this, I’d want to evaluate the depreciation strategy, including whether a cost segregation study makes sense, and make sure acquisition costs, repairs, improvements, and the property basis are being tracked correctly from day one. With an acquisition of this size, the difference between a repair and a capital improvement can also have a meaningful impact on the tax picture.

Since you’re planning to refinance after closing, I’d model that alongside the tax strategy as well. The goal isn't just to get to a 9.7% stabilized yield, it’s to know what the after-tax return and cash-on-cash position look like once the property is stabilized and refinanced.

The deal looks interesting from the numbers you've shared, but I'd want to see the actual trailing expenses and the assumptions behind that $36K rent increase before calling it a great deal.

Feel free to DM me, I’d be happy to send over a few resources that might be helpful.

Kasing Ng · Answer

Hi Nathan, I'll leave the buy-or-not call to the operators here, that's their lane. Mine's the tax side, and it's the one angle nobody's hit yet.

Your 8% and 9.7% are both pre-tax. What actually hits your pocket is after-tax, and depreciation does a lot of lifting. On roughly $1.5M of depreciable basis (after carving out land), that's around $50K a year in paper deductions, enough to shelter a real chunk of your ~$150K NOI. A cap rate never shows you that.

One catch worth knowing before you count on it: those depreciation losses are passive. Unless you or a spouse qualify as a real estate professional, or your income's low enough for the $25K active-participation allowance, they can get suspended and carry forward instead of offsetting your income this year. Not lost, just delayed, but it changes whether something like a cost seg study pays off now or later.

So the number I'd want before closing isn't the 9.7%, it's what this looks like after tax for your specific situation. Could be better, could be worse, but that's the one that spends.

18-unit duplex portfolio under contract at $1.88M — would you buy this?

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