Anything Wrong With My Numbers?
Hi all,
Please help with the analysis of this out of town property. I looked at the property over the weekend (3 hrs away) and was impressed with its structure and with how well it has been maintained. Here are the details:
24 unit (2 bd & 3 bed units)
Asking Price - $ 815000
Gross Rents - 169200 (owner uses current market rents)
Laundry - 2750
Approx expenses (given by owner):
RE Tax - 13547
Insurance- 4130
Repairs Maint- 8262
Lawn/Snow - 2754
Utilities/Trash/Water - 22032 (owner pays heat as well)
Management- 8262
Reserves/Misc- 4131
Total Expenses(approx)-63311
My analysis:
The property has 1 vacancy with the current rent roll of $ 144000.
Gross rent - 150300
Less Vacancy (10%) - 15030 (-)
Laundry - 2750 (+)
Gross Income - 138020
Less Expenses - 64869
(47% - includes mgt, taxes, maintenance, reserves, etc)
NOI - 73150
My offer price - $730K - $770K (start with the lower price and go upto the 770K).
There could be an upside potential if the heat bill is passed on to the tenants and with small rent increases.
Thanks in advance.
It looks like an excellent opportunity. How much is the down payment if any, what is your anticipated interest rate if any and how much will taxes increase?
Thanks for your replies.
If the owner accpets my offer, I was hoping to get a 90% LVT as the property speaks for itself and I have an excellent credit score of 800+ ... now is that too much to ask??
Mize, could you plz explain what u mean by:
"FYI - the lower the cap rate the higher the expected return should be on your investment."
I always thought that the higher the CAP rate, the better, maybe up to 10-12 and beyond that we need to watch out.
Are the existing properties cash flow positive? Are they difficult to manage?
With our current PM in place, they have not been positive. We are out about $500/mo on bad months to about break even on good months.
We are strongly considering replacing our PM if we decide not to sell.