Potential Deal Analysis, Seeking Insight 01013

[Ryan Dearing]

Hello,

I am a young real estate investing hopeful in the Springfield, MA area. I have been looking at a 22 unit apartment a town over, in Chicopee (01013) and was hoping to receive insight. Seller is including a three family in the deal.

Asking Price: 1.7 million. However, it was sold in 2012 for 650,000, and was listed at 1900000 2 months ago. I find it very unlikely and believe the seller has either over valued the property, or is desperate to sell for some other reason. 

Condition: 18/22 have been renovated to bring them to market rentable value. This makes me cautious about the other 4 units that weren't renovated. In addition, the 3 family condition looks "decent".

Unit make up: 15 2b1b, 7 3b1b

Monthly rent potential: 25600 (2b1b=1100, 3b1b=1300) With 3 family= 28900

Expenses:17000 (roughly)

Vacancy=15(very conservative, listed town vacancy is 5%), 

Repairs=5%, 

Cap Ex. 5%,

 Prop Man=5% (most would be done independently)

PMI=1852

QUESTIONS/COMMENTS:

Is there PMI on a commercial real estate loan?

I assumed a 5% interest rate, is that too low?

I assumed a loan of 1300000, however I still think this may be a little high. 

Assuming no unforeseen expenses, Yearly cashflow=101,000

Final Comments

I would have to implement very creative financing regardless of the final price. I've considered Seller Financing, or a Lease-option. All input is valued and appreciated.