Need Help Underwriting A Property!

[Shawn Connors]

Hey BP!

I am eyeing up a multi unit in a great location and I am trying to underwrite it and would love some feedback. I will be trying to apply the BRRR strategy for this property. Here are the details.

7 Units, 7585 sq ft, 7 (1 bed and 1 bath units) on 1.14 acres.  There is potential to add 3 more 1 bed and 1 bath units on the third floor and all of the units need updating and could generate more rent.  Here is the financial breakdown...

Purchase Price- $495,000 (Listed on the MLS)

Rent:

Unit #1:  $575

Unit #2:  $575

Unit #3:  $330

Unit #4:  $575

Unit #5:  $575

Unit #6:  $625

Unit #7:  $750

Total Rents- $48,060/yr

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Expenses:

Electric- $2400

Sewer and Water- $2100

Maintenance- $2254

Insurance- $3319

Other Expenses- $4000

Taxes- $8390

Total Expenses- $14,073

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NOI- $25,597

Purchase Cap Rate at Asking Price- 5%

Typical Cap Rate for Area-  8%-9%

Rehab Estimate (to update all the units and build 3 more) - $150,000-$175,000

Now I am trying to figure out what I would offer and how I could get the cash flow up in order to have the property appraise for much higher than it would now.  Please let me know if anyone could help or if you would need any more information.  Thanks