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Updated almost 2 years ago,
First MF Deal - Need confirmation
Hey all have my first MF deal I'm working. It's a D property in a B+ to A area. Long term owners who haven't managed well. Not updated at all. Lots of value add here.
Numbers: $700k purchase on 2 - 4 unit buildings (8 units). Getting $750/unit (roughly). Bank is asking for 25% Down ($175k) on a 20 year loan with 5 year adjustable. Interest rate will be around 6.5 to 7.25%. Taxes around $4k per year and assuming $3k for insurance. Property has baseboard heat and window units so low cap ex there.
I have Home Equity Lines up to $225k so part of that will be for the DP of $175k the rest used to update exterior and other vacant units.
Once updated and cleaned up I can get $950 for lower units $900 for upper units.
Goal would be to refinance the entire loan if rates are lower to get my DP/Rehab cost back. Or if rates go up get a second line to pull my home equity line out so I can free it up.
Once I get property stabilized I believe the value would be around 1.1 to 1.2 million with a 7ish cap (same cap rate I'm purchasing at)
I'm back and forth on if this is as good as I think it is. Currently have other purchases and businesses going so trying not to stretch out reserves and monthly income too much.
Would love your educated thoughts on the deal!