Would you buy this deal

[Stephen Kunen]

We started our first direct mail campaign for multifamily properties (5+ units) this month. So far we have one valid lead. However we think the seller is asking too much, even though it is a stabilized asset in a good area. Would you buy this deal?

Asking price: $1 million

8 3b1b apartments in 2 buildings + 1 office / in law suite + 3 storage units built in the 70’s in a good school district in Lehigh County, Pennsylvania (approximately 20 miles from the Allentown-Bethlehem-Easton MSA)

Income: $120,480

(current rents $8640 / month: 8 3b1b apartments for $1030 / month each, 1 storage unit for $400 /month;

1 additional office / in law suite 1b1b can be rented for $600 / month and 2 additional storage units can be rented for $400 / month each; these are currently used by owner)

Expenses: $50,107

(Electricity: $1,440, water and sewer: $6,400, taxes: $11,943, insurance: $2,400, garbage: $1,560, vacancy: $6,024, capex: $6024, maintenance, $6,024, management: $8,292)

NOI: $70,373

Cash on cash return: 6.0%

Cap rate at asking: 7.0%

BP rental property analysis:

https://www.biggerpockets.com/buy_and_hold_results...

Rents for the 3b1b can be increased to $1,200 based on Rentometer report. Additional amenities include a workout area in the basement with some equipment (weights, treadmill, etc.), on site laundry and parking. Additional income can be generated from coin operated laundry and vending machines.

Thank you for your input!

[Bjorn Ahlblad]

@Stephen Kunen Would I buy? I'd be willing to look more closely based on the gross numbers; but I'd want actuals. The taxes are based on a prior valuation and will increase by quite a bit based on the final sale price. Insurance is either way low or under insured. I suspect PM fees will be a lot more-in short you need better numbers. Having said all that if you can get the price down it might be a deal, but you will need a rent roll, financials, inspection etc to be more informed. All the best!