Newbie Needs Help Analyzing Possible First Deal 8Unit MFR!!!!

[Tory Ellis]

First let me start off by stating that i'm a rookie who's following the advice of many BP podcast and webinars by trying to take action!!!. So thank you @Brandon Turner @Ben Leybovich @Michael Blank and others for your great insight.

I did what I was told and established a relationship with a commercial broker who in turn sent me an off market listing that I believe is a great value add property.

This is a 8 unit MFR in an "A CLASS" neighborhood located in Bklyn NY within 2-10min walking distance to any and all amenities, (Barclay's Center, Malls, Shopping center, Banks, Restaurants, Museum, Parks etc.)

All 8 units are 4 rooms (2bedrooms) including 1 duplex apt.....  5 units are rent stabilized and 3 units are free market including Duplex, all of which are receiving way less than market rents.

Typical Market rents for 2 bedrooms in this area are 3k+/mth, also the typical vacancy rates for this area are @ 2%-3.5% (Bklyn market analysis). All leases will expire in 2016...

As far as market comps for this property goes, the only property in the area like this one is next door and is selling each unit as condos. This building sold in 2013 for 1.66mill.

AS PER PROFORMA

Asking Price = $3,400,000 GAI = $163,494 Expenses (ESTIMATED) = $44,391 NOI = $119,103 NOI / 3.4MIL = 3.5% CAP RATE (TYPICAL CAP RATES IN NYC IS 3.5 -4%)

However I'm lost on what the real financials are because of the DHCR reports a rent roll totaling $5,484/mth from the Rent Stabilized apts ONLY!! information on this report is as of November 11, 2014.

None of the rents from the free market apts were included on this DHCR report. Does this mean that the Free Market apts are vacant?

AS PER DHCR REPORT

GAI = $65,808         are these the actual numbers?

Expenses (ESTIMATED) = $44,391     why are the expenses estimated?

NOI = $21,417 is this the true NOI ?

Can anyone help me figure out a reasonable offer based on the above information? If there isn't enough info what else do I need to know?

I want to at least make an offer so that the Broker doesn't write me off as a tire kicker and stops sending me listings.

Any suggestions on what my next conversation with the broker should be?

I want to thank everyone in advance for the feed back...

Hey guys I'm trying to learn how to be a R.E rock star like most of you so PLEASE DON'T BEAT ME UP!!!! I've seen how brutal some of you are on the newbies on the forums.

Don't get me wrong I can take it with the best of them but do remember this is a learning curve for us newbies...