Running the numbers - your opinions

[David Doiron]

So, as a learning process and in order to practice my deal analysis skill I'm scouting mls to see if I could find a deal on my own. After some time I've stumbled on this 8-plex which could be interesting. This is to be taken with a grain of salt, as I'm looking to validate my thought process and analysis. I'm not even sure if that would be a good first multiplex project, since it's a repo !

City Evaluation = 680,000. Market price is usually 1.2 to 1.5 above Evaluation

Asked Price = 620,000 (I believe it is too high since the lack of tenants)

Nice Area, well located, high rental demand.

8 x 1Bed Room units out of which only 2/8 are rented (!!)

Potential revenue as per realtor 49,000/year (I believe it is too low, my research shows that avg 1BR units rent for about 600+ in that area = 58,000$/yr )

2 units need major rehab, other 6 needs love. Since it's a repo, I'm uncertain about other major maintenance such as windows, doors and roof.

So here goes my take on the strategy:

Offer 400,000

Get 500,000 hard money to account for rehab and upkeep costs

Rehab and Rent all 8

Refinance mortgage for a value of 700,000, so 80% amount to finance = 560,000

Pay off the hard money lender and fees. At that point, I have no more cash in the project, so I would think about holding the property. But the 50% rule shows a negative cashflow with that new mortgage value.

Possible exit is to consider this a flip and resell the plex for a one-time profit. 

When you see this as an investor, would you even consider taking the time to deep-dive the numbers and make a more detailed guesstimate.

Advice, comments on the analysis ?

Thanks for sharing and helping my learning :)

PS.: Property cannot be visited unless an offer is accepted ... smh :/