First deal and first offer

[Chris Kates]

Hey all, gonna make my first offer today on a multi-family duplex 3/2 X 2 in the Waco, TX area near Baylor. Asking price is $249,900 and has 100% occupancy. Revenue is $23,400 yearly, expenses are $9,200 yearly, NOI is $14,200 and purchase cap is 15.8% at asking price. I was unable to get an accurate market cap, but seller says it appraised for $271,000. Seller is a realtor/broker. If seller takes my offer of $219,900, it will have $51,100 in free equity. Minus my WP. Is this a good deal for a end buyer?

[Chris Soignier]

Cap rates aren't the standard valuation methodology until you get to 5 units and above.    However, applying your numbers 14,200 / 219,900 = 6.46% cap rate...not very appealing from that perspective. 

This property would typically be valued using area comps, and as a wholesaler you s/b able to value it that way.    I'd ask for the appraisal, and review it w/ a healthy skepticism.