Help on Deal Analysis and Cash Flow vs. Cash Flow after financing

[John Dennis]

Hey,

I wanted to get another set of eyes on a deal I am looking at.

I am relatively new to investing but have completed 3 relatively successful BRR duplexes in the last 2 years and am a facilities manager with a commercial general construction background by trade. Despite my background, I still learned a ton and have definitely made my share of mistakes which have ended up being beneficial. I have been studying the financial terminology, equations and how they relate to what I am looking for to advance my RE pursuit. I am looking to make my next jump.

I am currently looking at a 15 unit apartment building all 1 bed 1 bath.

Below are the current numbers vs. my projected numbers after improvements, minor rental increases and an overhaul of efficiencies.

Current

Price 1,050,000

Revenue $130,000

Actual NOI $60,000

Taxes and Insurance $20,000

Cash Flow after T's and I less financing $40,000

Cap Rates range from around 6-8%

Projected

Sale Price plus improvements $1,000,000

Revenue $135,000

NOI $95,000

Taxes and Insurance $20,000

Cash Flow Less Financing $74,618

Cash Flow after 75% Financing $23,905

$132 per door per month @ 75% financing

I hear the term Cash Flow tossed around a lot and don't really think the term is that helpful to an investor because it does not include financing. I prefer cash flow after financing but when you all consider this term does that take into account 100% financing or the typical 75%?

If I have an investor put up 300k in on this deal and then I finance the remaining 700k I'm only free and clear ~24k per year but that doesn't include paying back the investor.

I am sure I am missing something here? Right now it looks to be a no go at the current price without a lot of negotiation.

At an 8% Cap Rate I have the property value around 765K.

Any feedback would be appreciated.

Thanks,

John