Is this 6-unit a deal?

[Stephen Kunen]

Hello fellow BPers, we got this potential 6-unit deal from another investor, and wanted to get your thoughts on the MAO.

Price: seller is asking $360k

Units: 6

Unit Mix:

Three 1 bed's apartments. One 2 Bd apt. and two houses, 5 bed's each.

Financing Approach:

80% Bank

20%

• 10% down payment
• 10% seller financing - terms to be negotiated

Annual Financials:

-5% vacancy (the market is emerging and vacancy is very low - we know this because we own a 4-unit in the same area, purchased from the same seller)

-Rent roll: $55,800 - can be pushed up by $4,800 conservatively after rehabbing

-Property Taxes: $4,277 

-Insurance: $1,619

-Maintenance / Capex: $11,160 (projected - 20% of rents)

-Water / Sewer / Utilities: $6,200

-Property Management: $3,600 

In summary:

At purchase:

-$55,800 gross income

-$21,903 total expenses

Pro-forma:

-$60,600 gross income

-$22,529 total expenses 

We want to get your thoughts on this deal. We are probably looking at another $22k or so in debt service depending on the offer price and interest rate. What should our MAO be? Are there any other concerns?

Thank you!