[CALC] $80k on $1.3M cash deal for 4 family Jersey city

[John Kim]

In my local area (Jersey City, NJ), 5% caps have been the norm.  

I'm eyeing a 6% cap paying full cash.  Historically, I would finance as much as possible, but obviously 6% cap in an 8% borrowing environment is nonsensical.

$1.3M purchase price

$9100 gross rent

- taxes $17K

- water $2500

- insurance $3000

- 2% historical vacancy

- $6000/yr repair/capex

- In this area, tenants pay for broker fees.

- NYC views, rents are slightly under market. Each unit is very large for the area. 

- I currently manage my own property (mostly passive - snow, drain clogs)

Unit B. - $1000 (1bed/1bath) Possibly $1500 after $10k reno

Unit 1 - $3000 (4bed/2bath,1500sqft) Possibly $3500 after $30k reno

Unit 2 - $2800 (4 bed 2bath,1500sqft) Possibly $3500 after $30k reno

Unit 3 - $2100 (3 bed 1 bath,1200sqft) Possibly $2500 after $20k reno

$150 parking + some coin laundry revenue

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Net $80k/yr with decent upside post renovation.

6% cap as-is

7% cap upside.

Curious what you guys think.  This is my 2nd multifamily near NYC/NJ.  I have owned the first one since 2016 and it has been relatively stress free and passive income.

[Rick Martin]

Everything looks good, but I would be nervous underwriting 2% vacancy. Does this consider turn/make ready time? It doesn't leave any margin.