Good cash deal? - Multifamily Analysis

[Jerry Zhang]

Hi, I came across an interesting multifamily deal for all cash.

It's a 11 unit multifamily apartment in new Mexico. Current NOI is $37,000 with 9 out of 11 units rented. Proforma NOI is $64,000. Seller looking for $500k cash for this deal at 45k per door. Very light repairs needed and turnkey property. Cash on cash returns of 33.74%, buying at a 7.42% cap rate, Proforma cap rate is 12.82%. Goal is to wholesale this one.

I'm familiar with analyzing deals with seller financing where a good deal would be 3-5x ROIC, but I'm not as familiar with analyzing for cash deals, could I get some feedback for this one? Thank You

[Gino Barbaro]

@Jerry Zhang

What is the median income of the area, and the unit mixes of the apartments? I would look into market comps for value and rents. I would also do a lease audit to check for delinquency, and how many of these tenants were just leased to, and how many are actually paying. Heads in beds are good, but are those heads paying

I would ask this seller why is he selling. From a pure numbers perspective, it appears to be a very good deal. I would love to see you wholesale it to an operator and you keep a piece.

I know a few students who own and operate in NM, and I can make an intro for you

Gino