Orange county multifamily

[David Gutierrez]

Hello all,

I got approached regarding a potential off market deal that I am trying to analyze.

Location is Orange County, CA.  Blue collar area, not the nicest area but pretty good location that I am familiar with

7 units.  1 bedroom/ 1 bath

Gross rents 87000 but likely 20% undermarket

expenses 

2400 annual utilities 

4300 annual property tax

2000 property insurance

800) annual legal/property management/leasing

6000 annual repairs estimate)
7000 annual cap ex estimate

My question is, do I price it based primarily on what the CURRENT rents are? Market seems a bit hot still although cooling off and interest rates are pretty high. Current rents maybe put me around 1.2 million?

i still have further due diligence to do in terms of inspections, etc. But just want to gauge initial pricing before moving on..

[Rick Martin]

Underwrite at both current and market rent, and get an understanding of what value could be added. Start the negotiation at current rents, and have a strike price that you won't go beyond, knowing what you can operate it at.