Looking at a Multi-Family property - does this make sense?

[Brian C.]

I'm hoping someone can confirm my thought process, as I'm new to MF investing: At this point, I've reviewed the owners financial statements and I'm comfortable with the amounts. The 2015 financial statements show a NOI of $66k and the average CAP rate in the area, based on recent sales, is 6.5%. Is it reasonable to make a $1M offer ($66k / 6.5%)? To me this seems like an offer at market and should be fair. Anything higher must be supported by something unique to the property, which I haven't found during my due diligence. Also, based on my own analysis there appears to be an opportunity to add value by rehabbing units, raising rents and running a more efficient operation allowing for a $10k increase to the NOI over a year period. Assuming an all cash offer (to keep things simple) and based on my ProForma $76k NOI, does it make sense that this property would yield a 7.6% return? I appreciate the help!

[Patrick Liska]

that is correct in the offer price. as @Brent Coombspointed out, you will have a mortgage on top of all this, the NOI should not include that figure in it. so make sure the income will cover your mortgage and then leave you with some money.