Day 1: 24 Unit Apartment Complex Deal Analysis near Austin

[Account Closed]

Hey Everyone, my goal is to analyze at least 1 MFH deal a day for the next 30 days. For Today's Deal, I am analyzing a 24 unit complex I found on Loop Net (Address: 11519 Pecan Creek Pky). Below are the details:

Ask Price:   $2,595,000

25% DP:   $648,750

Monthly P&I (30 Year Amor @ 6%):   -$12,897.15

Annualized Market Pro Forma Numbers

Pro forma Rents (24, 2/1 units at $995/month):   $286,560

GOI with Vac/Cred at 8%:   -$24,357.60

Pro forma Expenses at 30%:   -$85,968.00

NOI:   $176,234.40

P&I:   -$154,765.80

Cash on Cash Return:   $21,468.60

Deal Metrics

Cap Rate:   6.79%

Debt Coverage Ratio:   1.14

Cash on Cash Return:   3.31%

Cost Per Door:   $108,125

Adjust Rent/Price Ratio (per door basis):   0.9202%

My MFH investing education is still on-going, but it looks like the seller is trying to sell this as a stabilized asset. Personally, for a complex built in 1979, the price seems a bit reach. The numbers do not seem to work for me either as, at a minimum, I'd like to be at 12% cash on cash with a DCR above 1.25. Also considering that market rents are near $995, there doesn't seem to be a value-add play here. To make this deal work, I would need to pick it up at $1,975,000, which would be a CAP Rate of 8.92%, providing me with a Cash on Cash ROI of 11.84%. The cash flow would effectively shift from $74.54 per door to $202 per door making this deal more attractive.

What are your thoughts?