Advise on a multiunit for Sale

[Marcus House]

Hello everyone. For 10+ years I have been total focused on single family homes for rentals and considering to step my toe into the multifamily space (all as an out-of-state owner). This property is FSBO and the details below was provided by the owner. How to evaluate this and more importantly what is fair offer on this? I do have a manager that has an annual budget for managing all of my SFH currently so his cost would go up to manage this for me as well.

ZONED COMMERCIAL

$9234YEARLY BASIC EXPENSES ….$770 MONTHLY

$417FIRE INSURANCE…….$35 MONTH

$4080 YEAR WATER/SEWER….$340 MONTH

$1800 YEAR ELECTRIC COST…$150 MONTH1st fl, halls, basement, storage area ground floor of owner

$1200 YEAR TRASH REMOVAL…..$100 MONTH

$100 YEAR LICENSE FEE….$8.00 MONTH

$1637 YEAR TAXES……$137 MONTH

BASIC MANDATORY SCHEDULED EXPENSES

UPSIDE POTENTIAL OVER THE NEXT YEARS FOR MORE INCOME AND HIGHER RENT COLLECTIONS.

1st floor $650 monthly,2nd floor front $425 monthly,3rd floor front $475 monthly, 2nd floor rear $400 monthly, 3rd rear $400 monthly when repaired.

$2350 MONTHLY INCOME….$28,200 YEARLY…..

IS RETIRING FROM THIS BUSINESS AND SPENT MANY A TIME AND DAY DOING REPAIRS, MAINTENANCE, AND KEEPING THE PREMISES IMPROVED AND REPAIRED OVER ALL THESE 30 YEARS.

EACH OF THE 5 (FIVE) APARTMENTS HAVE 2 BR, LR, KIT, BATH ALONG WITH OWN FURNACE AND OWN HOT WATER HEATER PLUS REFRIGERATOR AND STOVE

3 FURNACES REPAIRED WITH NEW PARTS….EARLY 2018

EXTERIOR PAINTING………JULY 2018

NEW ROOF......SINCE THE END OF 2017

[Anthony H.]

Well you have your annual expenses, and income from rents. That gives you with a NOI. Multiply that by your cap rate, let's say 10% and there you go you have an estimated value for the multifamily. Now I find the tax to be very little for 5 2bd. Also it seems you will have to do some repairs on the 3rd floor rear unit. So some expenses or capex to add to the list. Some big tickets items have been addressed like the roof and exterior paint. But a lot of other factors come into the picture. Like location, current conditions of the buildings, your future plans for this multifamily (renovate to increase rents which add value to the property as well), PM fees...

How much is he asking?