Check My Numbers: 16-Unit Construction on Gulf Coast of Houston

[Joe Fairley]

Am I missing something?

Commercial Property Valuation = NOI (Net Operating Income)/ Cap Rate (5.5%)

$7,291,636=401040/0.055

If I could acquire this brand new construction for less than $3 Million, is it worth it? and is it really worth 7.3 Million?

16 Units @ $3000 Per Unit = $48,000/month

-$3000 Insurance

-$3000 Property Taxes

-$400 Landscaping

-$500 Dumpster Service

-$4800 Property Management Fee

-$1440 3% Vacancy

-$1440 3% Capital Expenditures

($14,580 Total Expenses)

=$33,420 Per Month or $401,040 Per Year

I'm a builder in the Houston market and could potentially have this opportunity. Any comments, questions, or banter is much appreciated. 

Thanks,

Joseph

[Brad Hayden]

@Joe Fairley  

Joseph, I have a few questions/clarifications:

What type of property/units
Who are the tenants & how are the leases structured
I don't see utilities in the expenses -- are they paid by tenants
I see landscaping & dumpster, but what about other maintenance and repairs
Where did tax & insurance numbers come from -- they seem very low
If its new construction, what is the capex expense, or is this replacement reserves

Thx
Brad