30 Day Challenge – Small Multifamily Property Analysis

[John Leavelle]

Hello BPer’s, in my continuing effort to take actionable steps towards real estate investing I have started the 30 day analysis challenge (Analyze 30 properties in 30 days).  Here are my basic parameters:

Target Market:  San Antonio, Texas

Neighborhood(s):  Primarily areas just north of downtown (older neighborhoods and prime rental market).  Secondary will analyze properties in other areas of town if I need to.

Properties:  2-4 units multifamily and some small apartments.

Strategy: Buy and Hold utilizing the BRRR process (Buy, Rehab, Rent, and Refinance)

Finance: For my quick look analysis I will use the List Price with 20% down payment to determine a conventional 30 year mortgage on Zillow (typically will use 4 – 5% APR). However, for more detailed analysis for actual offers I would be using Creative Financing for purchases.

Cash Flow Goals:  Minimum of $100 per unit per month to warrant more thorough analysis.  Ultimately the property must be able to cash flow and average of $200 a month once stabilized (and refinanced).

I will use two methods to conduct my preliminary analysis.  First I will use the List price and any Seller/Broker provided Performa data to determine cash flow.  Secondly, since I will ultimately be using Creative Financing to purchase properties I must use very conservative methods in my evaluation. I will be adopting concepts used by BP Pros like @Brandon Turner and @ Michael Blanks.  I will use 55% of GAI for Expenses.  That will cover a full cosmetic rehab, capital expenses, vacancies, property management, and other normal expenses.  I will also develop 4 price points to work with any potential offer.  From the List Price, Strike Price (90%), Goal Price (80%), down to a Base Offer Price (70%).

The last part will be Action Required – Move on to next property, Keep on watch list, or Conduct a more detailed analysis.

I will post my analysis results on this post as I have the opportunity .I work a lot of hours so they may happen several at a time.  So if you are following please be patient.  Also, please provide comments or suggestions …. Keep me moving forward.

Lastly I have started a Blog here on BP to record my travel on the road to REI success; https://www.biggerpockets.com/blogs/7176-follow-a-texas-rei-newbie