All Forum Posts by: Todd Keith

@Ryan Ball - Agreed. 10.8% is not bad. That Cap Rate drops down to 7.64% if we use the usual Class C Op Exp of 45% instead of the 26.14% that the owner provided.  

@Michael Le - Your numbers are pretty close to what I'm showing on my spreadsheet. The negative cash flow comes in when we adjust the operating expenses up to my "safe" rule of thumb which if 45%. (@45% OpEx the Cash Flow drops to $-14 per unit/per month) 

However, if he does have Op Expense of 26.14%, then this becomes a more do-able deal. (Per unit/per month cash flow of $89....closer to the $100 per door/month rule of thumb)

@Michael Le - Yeah. That OpEx does seem mighty low. My rule of thumb is usually 45%. 

As for why I think it's priced high, I like to find property at $25K per door or less. At $1 million, the price per door is $38K. Aside from that rule of thumb, I shoot for $100/door in cash flow. At $1 million, with financing, this one negative cash flows. 

This is what makes me think the price is too high. 

If I gave the full asking price, and financed it at 5%, (10% down, 5 year balloon, 30 year amortized), I would be negative cashflowing to the tune of $-14 per month/per unit ($-364).

Underwriting 

The seller is willing to finance the deal at 10% down and 8% interest. (I think I can beat that)

I'm looking at private money lenders for financing. 

Hello BiggerPockets,

Can you seasoned multifamily investors give me some feedback on this deal that I am looking at right now. 

It's located in a Class C area in Akron, OH.  

Here are the details: 

• 26 unit property (All units are 1/1)
• All units are rented out at $525/mo for a GYI of $163,800
• Onsite laundry brings in $6,000. 
• GSI (including laundry) is: $169,800
• According to the current owner Op Expenses are 26.14% of GSI.
• All units are rented, but I'm figuring in a 10% vacancy rate. 
• Running the numbers on this one, the NOI is: $108,434
• Asking price: $1,000,000

Asking price seems high to me. What do you think? 

Thanks, in advance, for your feedback

Todd

I'm looking for a good/reputable property management company in Akron that can handle a 5 to 5 unit apartment complex. Any suggestions would be great.

Mike and Fahad - The exec summary should be in your inbox now. Thanks. 

Both Executive Summaries should be in your inbox now, Christopher. Let me know if you have any questions. 

Should be in your inbox now. Thanks

@Randy Bell - How do you plan to search for properties in DFW? Are you using direct mail, loopnet, or something else? 

Thanks, @Brendan Taylor. I'll send over a connection request and we can discuss further.