Need help to analyze two apartment deals

[Tianyun Zhang]

Hi BP community,

    I am a new investor in Southeast Michigan. I am looking to invest in an apartment building of 5-15 units. I found 2 deals and I would appreciate it very much if someone could help me analyze the deals. 

    One is at 625 Owen St, Saginaw, MI, 48607. It has 2 studios and 5 one bed rented for 500 and 550 perspectively per month. The broker said the occupancy rate is about 90% all the time because it is very close to a hospital and most of their renters are hospital residents. The asking price is 270K. It seems like a pretty good deal, but that location in Saginaw seems a little bit rough. I also asked a local investor in Saginaw. He said he thinks the building is overpriced. I did the math and the cash flow seems good.

    The other is at 176 W Columbia Ave, Belleville MI, 48111. It has 8 one bed units. The asking pricing is 475K. The rent is between 550 - 675 per month. It is a much better neighborhood. 

    I am just not sure if the asking price of these two deals make sense or not. Should I offer lower? 

    Also if someone in Southeast Michigan is interested in these two deals, please don't hesitate to reach out to me. I am looking forward to partnering with you.

    Thank you in advance. 

[Michael Randle]

Well I think generally the first question would be, what are the cap rates for the area? Class A,B, or C property? What is the NOI? Did you run those rents through a third party system to see if they are at market? Above or below?