Opinions on a potential deal

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Opinions on a potential deal

Deacon H.
Investor · Northeast · Member since 2019 · 8 posts · 0 votes

I have an opportunity to buy an off-market 3 family house. 

I was wondering if I could get some opinions on this deal. Perhaps I'm not thinking of something.

Market price is around 400k so I'm hoping to get this around the 380k or 385k range since there is no broker fee and we'd likely split the benefit. 

Rent is about 53.5k a year. 

Operating costs are about 21k a year. 

NOI = 32.5k

Cap Rate (assume 385k) = 8.4%

Financing:

I'm trying to find a commercial lender that will allow me to do a 20% or less but am only finding local ones that'll do 25% down. I'm going to keep looking.

If I'm able to find a 20% down, the mortgage will be around $1900 a month and I would cashflow ~850 a month.

Total invested would be the down payment (77k) plus closing costs (13k) = 90k.

That's a COC of 11%.

Is my math right? Is this a decent deal? 

I will be asking for owner financing but what should I target? 5% or 10% down with a 5% rate? 

Is there anything else I'm missing or should consider? 

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  • Deacon H.
    OP
    Investor · Northeast · Member since 2019 · 8 posts · 0 votes
    7y
    Originally posted by @Account Closed:

    You need to break down the expenses.   Looks a bittish low.

    $53000,  10% vacancy is $5,000 .  Thats a quarter of your expenses right there.

    Oh. yes my numbers have an assumed 7% vacancy to be on the safer side. Should I go 10% for the sake of evaluation?

    I took an average of several years of operating and repair expenses. On the high side 25k. Low side 19k. The average came out to 21k but I could increase that to 22 or 23 to be safe?

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  • Deacon H.
    OP
    Investor · Northeast · Member since 2019 · 8 posts · 0 votes
    7y
    Originally posted by @Account Closed:

    You spending $400k if you want help in analyzing you need to do line by line.  If seller is giving you totals ask for details of the totals.

     Yes I have the details. Every expense. I was just trying to summarize a bit for brevity sake. 

    With every property there are little nuances. Example - There was initial repair and make ready costs when she purchased it which affects the first year NOI.

    In order for you to help evaluate this deal what should I provide? Upload a spreadsheet of the details or is there a better way? 

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  • Deacon H.
    OP
    Investor · Northeast · Member since 2019 · 8 posts · 0 votes
    7y

    I think I found a better way to represent the detail.

    Included below are more of the details short of giving every single line item for every single expense.

    Here are the actuals since purchase. I've highlighted certain cells to show abnormalities and provided some reasoning below.

    Here are the actuals shown at a monthly level.

    And here are the actuals shown at a monthly level REMOVING the 1st year which had some high make ready costs that I don't believe I will need to incur again in the immediate future. (separating utilities, cosmetic repairs to the exterior etc).

    Rent was raised for 2019 and is fully occupied on annual leases.

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