Deal Analysis in Florida

[Nicholas Kitchen]

Currently, I am working with him on a deal. I’d like to give you the details and see what yall’s thoughts are...

10 Unit (of 2 buildings)

Listing Price: $1,100,000

Potential Gross Income: $124k

6% Vacancy (but building is currently 100% occupied).

Effective Gross Income: $116k

NOI (Including a 5% CapEx and 7% Property Management): $75k

Debt Service is around $50k

Leaving me with an annual cash flow of $25k

DSCR: 1.5

B/E Occupancy 73%

Cash On Cash: 7% (with 30% down payment)

On paper, it seems like a great deal based on everything else I have analyzed in my local area. The problem I have with this is that the current owner says the place is always 100% occupied and it has a waiting list. If I drive around and look at other rent comps in the immediate area, the other rents are either AT or LOWER than the rents on this property, and this property isn’t nearly as nice as the surrounding apartment complexes (due to nice gyms, pools, etc).

Any suggestions would be greatly appreciated!