Distressed Short Sale Multifamily

[Tyler Zindars]

Hey,

I've been buying and rehabbing single family homes and renting them out for a while now and with good success. However, I was wanting to scale up and I prefer projects where there is rehab work as I get the appreciation, lower operational and maintenance costs, as well as better quality tenants where I can repair them. I've found a multifamily project in a smaller town that I'm having a difficult time deciding whether or not this project is the best use of my time and money. I'm looking at taking a family partner on this deal so I can spread my risk out a little bit. The property is probably a c location.

The bank is very motivated to get a deal done. I'm looking at purchasing the property for around $64,000 and putting about $104,000 into renovating the units over a six month rehab timeline.

Here are the specs on the property. 

There are two buildings on a corner lot. 6 units are two bedrooms/1 bath and 2 units are 1 bedroom/ 1 bath. Both buildings were built in 1976. Buildings seem pretty solid, but one needs a roof as well as almost all the windows need replaced. Most units need a full rehab. 

The estimated rents are around $450 for the 2 bedrooms and $375 for the 1 bedrooms. The property needs significant work. Only three of the units have paying tenants, the other 5 units are empty and in poor condition. I estimated I would need to spend about $15,000 a unit on one building and about $11,000 per unit on the second building. I generalized some of the expenses, but for me these costs average out based on past rehabs projects. I would work as the GC and oversee the work and any subcontractors.

I believe I can get the rents up to $500-$550 for two bedrooms and $425-$450 for the 1 bedrooms. 

Estimated Repair Costs front four units in 1st building

1. Flooring $3000

2. Windows $2100

3. Kitchen $4000

4. Bathroom $1500

5. Trim $1000

6. Fixtures $500

7. A?C $$1500 split unit /$3000 central A/C

8. Misc. $1000

9. Landscape $250 per unit

Estimated Costs are $14,600 per unit

I'm going to spend about $15000 per unit

Estimated Repair Costs for back four units in 2nd building

1. Flooring $1500

2. Windows $500

3. kitchen $4000

4. bathroom $800

5. Trim $600

6. Fixtures $300

7. Roof $5000

8.Misc. $1000

9. Landscape $250

Estimated repair costs are $9000 per unit in second building

Roof Repair? $5000-$10,000

Estimated repair costs around $11,000 per unit when figuring in roof costs

Estimated repair costs of $104,000 for both buildings

I could offer $64,000

Repairs would be $104,000

closing costs $2000

Estimated all in costs at $170,000

Estimated Gross Income of $43,800

vacancy 5% $2,190

property taxes $3,000

insurance $2,000

maintenance $2,500

snow/mowing $800

utilities $1000

pm $3,500

garbage $1200

water $1500

Estimated Fixed Expenses $17,690

Estimated Net Income $26,110

Anyways I wanted to get some feedback. This is a big project. If I were to sell this building later on and it was rehabbed what would you value it at? What would the income be worth to you if it were turn key?