My First Multi Deal How did I do

[Ed Larson]

Offer just got accepted for a six unit deal. I am starting small to get my first commercial loan and get some seasoning for the big deals to come. The property is located in Lakewood, WA within one mile of Fort Lewis main gate. It is a five unit apartment building with a two bedroom home on the property. They are metered separately for electric and are on a septic system. Everything is well maintained and just needs cosmetics. The apartments are three one bedrooms and two two bedrooms, I also plan to rent out the home. The current rents are way below market one unit is rented at 450.00 that should be 650.00 per month. The owner lives in the house and his son lives in one of the 2 bedrooms for free. When asked why the rents are so low the owner said he was not in it to get rich just put some money in his pocket and help people out. This place will not make me rich either but it will be profitable. The offer price may look high due to the current NOI but just filling the 2 non producing units kicks it up to a 10 cap. Bringing the rents up to market will result in around 11. I don't want to bore you with all of the numbers but here are a couple.

Offer price 275,000.00

Current net rents 22,230.00

Current NOI 14,183.00 Using his numbers

Current annual expenses 8,047.00

My numbers after property is stable and fully rented with 5% vac property management and a maintenance reserve.

Net rents 45,600.00

Annual expenses 15,607.00

NOI 29,993.00