Evaluating an 8 plex

[Stewart Campbell]

Hey everyone! I have come across a deal that I need help on the ARV of an 8 unit apartment building in a C class area of New Orleans Louisiana.

Info on the deal: The unit consist of 6 2-bedroom and 2 1-bedroom

Building is around 5500 square feet

Purchase price is still being negotiated but will fall between 350-370K. At 365K that would equal $45,625 per unit

Renovations I believe will be between 190K - 225K. At 205K that would equal $25,625 per unit. 

This would equal an all in cost at 585K.

The 2 bedroom units will rent at 1200 while the one bed will rent at 900 per month for a total gross rent equaling to 9K per month or 108K per year. 

My expenses per month come out around 4150 a month or close to 50K a year. My expenses included property management, general maintenance, capital expenditures, taxes, insurance, vacancy. 

SNAP SHOT

Purchase price plus renovations: $585,000

Gross: $108,000

Expenses: $49,880 = 46% Of Gross

NOI: $58,120

I have an Idea of what it is worth but would love for other peoples opinion. 

My approach for this project would to eventually do a refinance once all units are renovated and occupied. I may not recoup all of the money that was put into the project but it would way less than a traditional down payment on an 8-plex would be. The area is a C class neighborhood that is very accessible to downtown New Orleans with some new construction done over the past few years. 

Any insight would be greatly appreciated. I can provide more information if it will help evaluate the deal.