First Investment Property 6 Family Cincinnati Ohio

[David Hildebrandt]

So I am ready to do my first deal. I am very intrigued by the BRRRR method. I have a partner with the cash necessary to fund a down payment. And have begun the process of analyzing properties through the BP calculator. I have taken the advice of @Brandon Turner and begun treating the process like a funnel. My goal is to analyze three properties by the end of March.The issue I have run into with these 5+ multi units is that the pro forma numbers only take you so far. The unit I am focusing in on now is 6 units, four floors with a 2/3 1700 sq ft first floor 4 1/1 800 sq ft on floors two and three and a 2/2 "penthouse" on floor four. I am not really seeking analysis assistance on the deal as I want to work through it myself but I will include some details below none the less. My question is, am I wasting the listing agents time going to see the place before I even know the ball park feasibility of the deal? Like what if my offer is tens of thousands below what they are asking, should I let them know that before I go see the building? Assuming I do go, what kind of questions should I be asking as I visit the place?

From the agent-provided Offering Memo

$410k ask 7.8% CAP 8.4 GRM
2/3 - 1728 ft -$695/mo
1/1 - 864 ft - $605
1/1 - 864 - $600
1/1 - 864 - $560
1/1 - 864 - $595
2/2 - 1728 - $1200 ( estimate by owner...this penthouse is currently owner occupied and not generating any rent, this is the top floor and while all units have hillside views of down town this one certainly is the best)

$4255 montly "potential" rents

$14,708 Operating Expenses
$32146 NOI

My problem with these numbers is the owners are estimating an addition $14,400 annually based on the unit they currently occupy being rented. Far and away the most expensive unit in the building and above the market rents which I believe to be $995.

Also this area does not deserve a 7.8% cap, the investment is not that secure. But a recent 7 million dollar project just completed around the corner including a 100+ stall parking garage and 225 seat performing arts theater and popular hipster restaurant represent at least some money coming back to the area. The image below is what makes the property period and why this area is experiencing any reinvestment. The five closet multis for sale (all within one mile) have caps based on ask of 10,10,11,12,9 and 9.5.

Is this thinking logical?

$32,146 project NOI - $14,400 unrealized rents = $17746 / .078 = $227,512