Thoughts on this 16 unit apt in Mississippi

[Kyle D.]

$550/mo

6-12 mo leases.  avg. 1 turnover a month (averaging over past 24 months).

$91K gross (~90% occupancy)

$22k expenses (taxes, insurance, water, sewer, trash, electric)

$5k in repairs (~5% of gross)

$9k mgmt expenses (10%)

$54k net before note

($95k down) 380k loan @ 4.75 for 20yr is 29k/yr.

$25k noi ? 

i have talked them down to $475k. i am hopeful to try and end up at $460k.

new roof last year. option to buy 2 acres adjoining for possible additional building ($50k) - thoughts on that? zoning is lax in this county - i'm sure they would approve another 16 unit.

any insight would be great.  this is my FIRST attempt to go all the way down the number path before I pull the trigger on my first rental property.  

[Ben Leybovich]

1. Figure $600/door for repairs including turns - x2 what you have currently

2. Figure $300/door minimum for CapEx reserves

3. Underwrite taxes - they won't be the same as your buyers

4. Figure 12% for management - you'll have eviction costs, lease-ups, renewal fees, etc.  If they tell you 10%, you'll run at least 12%.

NOI = Income - Expenses (not including cost of note). So - currently you show $54k net; that's the NOI. I think that's easily $10k too high. Based on this, $375,000 - $400,000 sounds about right for you to do OK. But, I no nothing of the location, which could change things to the down-side. It won't change things to the up-side, though - stuff costs what it costs!

Hope this helps, Kyle!