New Investors Need Help on Multifamily Unit

[Doug Merriott]

Hello Bigger Pockets,

My wife and I have begun looking at our next property acquisition and I honestly think we found a diamond in the rough right away. The property is three buildings on four 25'x145' lots (slivers of land), two are efficiency duplexes and the third is a 3/1. The property is in a passable neighborhood, but it is very close to a hospital and shopping centers so the tenant base will be significant. The buildings need new roofs and some cosmetic updates, but I would say they are livable right now. Asking price is $125k, we will not be putting any of our own money in, $25k from family at about 5% interest and the balance would be hard money. The numbers work up to 12% interest, but I don't quite know my exit strategy to get in to cheaper loans considering this is a five unit not a quad. Comps are all over the map, but my best guess for market value is $25k land, $70k 3/1 and $30k each for the duplexes for a total replacement value of $150k.

I used Brandon's spreadsheet to come up with the numbers below.

Asking price $125k

Rents will be 3/1 - $775, efficiency - $435*4 =$2515 or $30k/year. Only the 3/1 is rented right now.

NOI $22k

Mortgage $15k

Taxable Income ~$5k

I have a lot of plans for the property that would bring me an additional $300/month. I just like to look at worse case scenario first.

Suggestions, glaring problems?