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?

Kevin Cecchine · Answer

Nathan, since you're buying with cash and refinancing afterward, I'd look closely at how the refi will be structured before you close. An 8% going-in cap is solid for smaller markets, but how much you can pull out depends on how the lender treats nine buildings spread across three towns.

A few points to consider:

- One blanket loan or several. A single blanket loan on all 9 duplexes is often easier and cheaper to close, but ask for release clauses so you can sell or refinance one building without disturbing the rest.

- Seasoning. Some lenders will only lend on your purchase price for the first 6 months. If you want to lend off a higher appraised value, look for delayed-financing programs that allow a refi soon after a cash purchase.

- Coverage at $1.2M. On about $150K of current NOI, a $1.2M loan at today's rates on a 30-year amortization should land well above 1.25x DSCR, so you may have room to borrow more if the appraisal supports it.

- Lender type. Small-balance multifamily lenders and regional banks often treat a portfolio like this differently than 1-4 unit DSCR lenders, so it's worth getting quotes from both.

Full disclosure: I'm Kevin Cecchine at ION Capital Solutions. We're a broker with 150+ lenders and no upfront fees, and I'd be glad to help line up the refinance on your duplex portfolio. (Written with help from an AI assistant.)

Chris Straughn · Answer

Nathan, one thing I'd check before judging the 8% is what's inside the $99,151.

At 39.7% of gross, it's lean for nine 1993 buildings in three towns. Three lines are often missing from a seller's number:

- Management. If the seller self-manages, 8% of $249,840 is about $20,000. That alone takes NOI to roughly $130,700, about a 7.0% cap at $1.88M.

- Reserves. Even $350/unit/yr is $6,300 more, which puts you near a 6.6% cap.

- Property taxes and insurance after the sale. Ask the county how it re-assesses on transfer, and get your own insurance quote rather than using the seller's.

If those are already in the $99K, great; the 8% holds up better than most. If not, I'd re-price off the corrected NOI, not the stabilized $182K. Also check that the refi lender will size the $1.2M on trailing NOI, not on the rent upside.

Asking for the T-12 and rent roll by building, as others said, is the fastest way to see which of these are in there.

Disclosure: I build Doorcount, a deal-underwriting tool. Drafted with AI help.

Ibrahim Mawri · Answer

Two things I haven't seen covered yet. First, pin down how the refi actually gets done before you close. Nine duplexes are nine separate 2 unit properties, so you're looking at either one blanket loan from a commercial lender or a stack of individual residential loans, and the rate, recourse and prepayment terms can be very different. Ask a couple of lenders now whether they'll lend right after a cash purchase, how long they want you to own it first, and whether they'll size it off your purchase price or a new appraisal. Second, check property taxes in all three towns at your purchase price. If any of those counties reassess on sale, the seller's tax line in that $99K is probably too low, and that comes straight out of your 8%.

Quetzaly Torres · Answer

Nathan, you're planning to put up $1.88M cash and refinance around $1.2M afterward. Is leaving $680K+ in the deal intentional, or would you prefer to preserve some of that capital?

Also, do you know what's motivating the seller to sell all nine duplexes? Depending on their situation, there may be some flexibility in how the purchase is structured. The 8% cap is interesting, but I'd want to understand the seller's motivation before assuming an all-cash purchase is the best approach...

Matthew Morrow · Answer

@Nathan Ante an 8% cap on paper is a starting point, not a verdict. I'd want the actual rent roll and leases, not a pro forma, and I'd compare the seller's expenses to what you'll really pay, especially taxes after the sale and insurance. With 1993 builds, nine duplexes means nine roofs and a lot of HVAC aging on the same timeline, so price the capex in. Since you're paying cash and refinancing later, find out now what a lender will appraise and lend on. Appraisals are coming in light right now. Just my experience, but hopefully it gives you something to consider.

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

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.

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

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

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

13 Replies