24 unit, 8.17% Cap Rate, 7.51% GRM

[Eric Tan]

I saw this property on Loopnet: What would you ask about/analyze? How would you get financing? 24 unit in Chicago $2.38M 8.17% Cap Rate, 100% Occupied, 7.51% Gross Rent Multiplier Bonus 2 lots 35x100 one has SFR used as office for building Next to University Next to Train

[Nick B.]

Ask for the last 3 years of P&L statements and current rent rolls.

Then find out market rents and demographic information about the subject property area.

Then compare current performance with the potential (that is if rents are adjusted to the market).

Then verify expenses to see if they are above of below what a good management company can achieve. 

Then use projected expenses and market rents to arrive to your NOI.

Then calculate your stable value. Subtract rehab. Subtract your anticipated capital gains. The result is your maximum offer price.