Skip to content
×
PRO
Pro Members Get Full Access!
Get off the sidelines and take action in real estate investing with BiggerPockets Pro. Our comprehensive suite of tools and resources minimize mistakes, support informed decisions, and propel you to success.
Advanced networking features
Market and Deal Finder tools
Property analysis calculators
Landlord Command Center
$0
TODAY
$69.00/month when billed monthly.
$32.50/month when billed annually.
7 day free trial. Cancel anytime
Already a Pro Member? Sign in here

Join Over 3 Million Real Estate Investors

Create a free BiggerPockets account to comment, participate, and connect with over 3 million real estate investors.
Use your real name
By signing up, you indicate that you agree to the BiggerPockets Terms & Conditions.
The community here is like my own little personal real estate army that I can depend upon to help me through ANY problems I come across.
Multi-Family and Apartment Investing
All Forum Categories
Followed Discussions
Followed Categories
Followed People
Followed Locations
Market News & Data
General Info
Real Estate Strategies
Landlording & Rental Properties
Real Estate Professionals
Financial, Tax, & Legal
Real Estate Classifieds
Reviews & Feedback

Updated over 7 years ago, 05/18/2017

User Stats

50
Posts
3
Votes
Michael Newman
  • Dpo, AE
3
Votes |
50
Posts

Deal Analysis -- 8 unit South Side Chicago,

Michael Newman
  • Dpo, AE
Posted

Hey all,  Hoping to get some assistance on the property analysis below.  I like this property itself--recently renovated, big units, good area, and the $ per unit while on the high end has some comps likewise in the area.  That said, in comparing the offering current/proforma numbers to my, more conservative number crunching, it doesn't yield a big profit incentive.  Looking for some feedback on whether my numbers/assumptions/planning are just plain off.  Of note, the property was just finished so in process of being rented out--so the current rent is skewed downward, and pro forma are more likely reflective of year two I figure. I have maintenance low for the first two years given the just finished renovations--but increasing in later years.  I also plan to invest in utility saving measures immediately so these expenses are reflective of that.  I typically increase rents/expenses 2-3% year on year, and try to account for all expenses I can think of.  

Lastly, I apologize for the formatting--can't seem to get the table to transfer nicely.

Ok, have at it--critical comments very welcome. Thanks. Michael.

Their Numbers



Asking Price circa $800,000
My Price $800,000



$ Down $200,000


Mortgage $600,000
Annual Mortgage $36,481
Year 1
Revenue Current
ProForma
Gross Potential Rent $71,460 $120,000
Vacancy Rate (%) -$26,400 -$6,000
Net Rent Income $45,060 $114,000
Bad Debt $0 $0
RUBS $0 $0
Collection/Eviction $0 $0
Damages $0 $0
Application Fee $0 $0
Move in Fee $0 $0
Late Fee $0 $0
NSF Fee $0 $0
Other income $0 $0
Gross Income $45,060
$114,000
Expenses



Property Taxes $3,000 7.42% $12,000 11.12%
Insurance $5,000 11.10% $5,000 4.39%
Gas $4,000 8.88% $8,000 7.02%
Electric $1,000 2.22% $1,000 0.88%
Water $2,000 4.44% $3,500 3.07%
Management Fee (5%) $3,500 7.93% $6,000 5.26%
Maintenance $5,000 11.10% $5,000 4.39%
Operating Reserves $0 0.00% $0 0.00%
Pest $0 0.00% $0 0.00%
Misc $0 0.00% $0 0.00%
Advertising $0 0.00% $0 0.00%
Janitor $0 0.00% $0 0.00%
Supplies $0 0.00% $0 0.00%
Snow/landscape $1,200 2.66% $1,200 1.05%
CPA $0 0.00% $0 0.00%
Legal/Eviction $0 0.00% $0 0.00%
Trash $1,500 3.33% $1,500 1.32%
Leasing Commissions $0 0.00% $0 0.00%
Decorating/Turnover $1,800 3.99% $1,600 1.40%
Total Expenses $28,000 63.% $45,000 39.%
NOI $16,000 36.% $68,000 60%
Debt Service $36,480 $36,000 pro forma
DSCR 0.46 1.88
Cash Flow -$19,800 $32,000 pro forma














My Numbers


Asking Price circa $800,000
My Price circa $720,000



25% down
$ Down $180,000
$180,000.00


Mortgage $540,000
Monthly Mortgage $3,127 $37,525.51
5.00%, 25 yr amort

Current Pro Forma
Revenue Year 1
Year 2
Rental Income $96,660 $109,800
Vacancy Rate (8%) -$7,733 -$8,784
Net Rent Income $88,927 $101,016
Bad Debt (2%) -$1,779 -$2,020
RUBS $0 $1,920























Gross Income $87,149
$100,916
Expenses Year 1
Year 2
Property Taxes $12,672 14.54% $12,925 12.81%
Insurance $5,150 5.91% $5,305 5.26%
Gas $8,240 9.46% $8,487 8.41%
Electric $1,030 1.18% $999 0.99%
Water $3,605 4.14% $3,497 3.47%
Management Fee (7.0%) $6,100 7.00% $7,064 7.00%
Maintenance 5% $4,357 5.00% $5,046 5.00%
Operating Reserves $2,400 2.75% $2,400 2.38%
Pest $320 0.37% $326 0.32%
Misc $500 0.57% $510 0.51%
Advertising $500 0.57% $500 0.50%
Janitor $2,000 2.29% $2,040 2.02%
Supplies $500 0.57% $500 0.50%
Snow removal/landscape $1,200 1.38% $1,224 1.21%
CPA $800 0.92% $816 0.81%
Legal $871 1.00% $1,009 1.00%
Trash $1,530 1.76% $1,561 1.55%
Leasing Commissions $2,000 2.29% $2,000 1.98%
Decorating/Turnover $1,632 1.87% $1,665 1.65%

Total Expenses $55,408 63.58% $57,874 57.35%
NOI $31,740 36.42% $43,042 42.65%
Debt Service $37,525.51 $37,525.51
DSCR 0.85 1.15
Cash Flow -$5,785 $5,516.41 2.69%









CAP Rate 4.41%
5.98%














































































































































































Loading replies...