This looks good to me, am I missing something?

[Steve H.]

Considering this Buy and Hold Joint Venture partnership and was looking for some expert opinions on what is being offered.  As far as I can tell from my analysis on the investment it looks good....what if anything am I missing?

Details:

The suite mix consists of 17 one bedroom units and 1 bachelor suite. Recent renovations include all common area carpets replaced, new windows in all but 6 units, a new boiler 3 years ago, a new roof 4 years ago, and all suites are in good shape, several renovated recently.

There are 9 paved surface parking stalls.

This property presents a value-add opportunity through sound management with rental increases, as rents have not been increased in 2 years.

We want to raise $500,000 to close on the property. There will be a bank loan of $1,452,000.

The money will be raised via a Shareholder Loan and we are offering 40% ownership for $500,000 for a $772,000 share value. A minimum required investment is $150,000.

Return per investor will be $9,000/yr per $150,000, starting month 13 onward– or a cash on cash return of 6.0%. Plus annual percentage profits per share, and a conservative 3% increase in property value. During the 6th year refinancing will return the balance of the principal, but the investor will maintain their original share purchase value. Over 6 years the investor returns are 9.1% on shares, 0.5% on operating profits, and 3% on property value = 12.6% annual return.

The annual payments starting will still allow for appropriate renovations and rent adjustments. Mortgage pay down will be about $33,300 per year, plus at 3% projected annual equity appreciation of another $300,000, will equal $500,000 value to refinance and payout shareholders original investment.

Financial Analysis:

Purchase Price: $1,930,000
Down Payment: $ 455,500
Closing Costs: $ 20,000
Reserve Fund: $ 45,000

Mortgage Payment:                                    $ 4850                     $58200
Insurance:                                                   $ 500                      $ 6,000
Taxes:                                                         $ 915                       $10,976
Property Management:                               $ 1,050                    $12,600
Utilities:                                                       $ 1,362                    $16,345
Maintenance:                                              $ 1,800                    $21,600
Vacancy Allowance:                                    $ 350                      $ 4,200
Total Expenses:                                          $ 10,826                  $129,921
Gross Rents:                                               $14,251                   $171,014
Cash Flow:                                                  $ 3,424                    $ 41,093
Projected Rents                                          $16,900                   $202,800
Optimization Cash Flow:                             $ 5,240                    $ 62,879