Requesting rental investment analysis

[Morgan Iacolucci]

Hi- including some analysis I put together for an investment property. It is a duplex property in Seattle. The property needs work, and the outlook on this deal isn't looking too good. But I'd like to come back with an offer. The property is REO and appears to have been purchased by the back for price in the spreadsheet so I don't believe they'll go lower. Any ideas on ways to structure a deal that would give the bank, and maybe a contractor exposure to the outcome (i.e., profit sharing) so that the purchase could go through at a lower price? Otherwise, how does this compare with what you're seeing in N.Seattle area? Any feedback is appreciated on this one.

Google drive link to full spreadsheet

Cost and Revenue Assumptions
List Price	550,000
Land	302,500
Building	247,500
Improvements	175,000
Closing Costs	4,000
Total	729,000
Number of Units	2
Average Monthly Rent	1,800
Other Income
Gross Monthly Revenues	3,600

Operating Expenses		Yr1
Electricity	0.3%	0
Insurance	11.9%	4,900
Water/Sewer/Garbage/ Electricity	3.9%	1,600
Property Taxes (On total value of property)	0.1%	6,086
Repairs and Maintenance	5.0%	2,052
CapEx	4.5%	1,850
Professional Fees	0.6%	360
Advertising	0.5%	210
Other	1.2%	0
Total Operating Expenses	11.8%	17,058
Expense Ratio		42%
Net Operating Income	88.2%	23,982
Capitalization Rate		3.29%
Operating Ration		58%

Scenarios		Gain on Sale	Cap Rate
Estimated Exit Price/ Gain On Sale - 1 Yr	-4.7%	(34,000)	5.50%
Estimated Exit Price/ Gain On Sale - 2 Yr	0.1%	750	5.50%
Estimated Exit Price/ Gain On Sale - 3 Yr	5.1%	37,238	5.50%
Estimated Exit Price/ Gain On Sale - 5 Yr	10.4%	75,549	5.50%