Core 4 in Endicott, Binghamton and Johnson City

[Joseph Pichardo]

Good day all. My partner and I came across a possible Multi Fam in Endicott, NY. After factoring the deal with owner financing, we estimated a 22.3% cash on cash ROI. That's factoring 23% for vacancy rate.

My question to those familiar with that area, how rough is the rental market. Is 23% really the vacancy rate?

Lastly, if I decide to to go through with this I would need an Agent for tenants and deal finding, A GC, a PM and a Lender willing to refinance an LLC after a or so.

Thanks in advance I really appreciate any perspective.

[Stephanie Jacobson]

Thanks @Paul McCue, you're the best!

Paul is completely correct here, and he knows his stuff. Endicott will probably not attract many students, no, meaning in a nutshell your rent will be lower but your turnover is almost guaranteed to be less. Your numbers seem pretty conservative, which is a good thing: you're counting management at 10% and maintenance at 10%, which is a bit of overkill because some things are counted in there twice.

You and I just spoke on the phone, but I'll put it here for others' benefit as well: the best way to tell a vacancy rate is to go by the building's history, in my opinion. You want to be mindful of the economy and the surroundings, but if a building has a solid rental history for the past few years you can pretty much take that to the bank. If it doesn't then you can point to things like poor management (most common culprit), poor property condition (second-most common), economic factors, etc. Some of these are "curable defects", meaning things you can change, and some aren't.

The recipe for a good deal involves finding an under-utilized property, getting a good price, and forcing some appreciation after you close. If you found a place that's a good deal with good history, that's fantastic! But that rental history should give you good answers.