First 8 unit multifamily property, good deal?

[Navid A.]

Good evening BP!

Came across an 8 unit property and I'm really close to pulling the trigger on my first multifamily deal, but before I do...thought it would be best to check in with my favorite online community. Any suggestions and/or thoughts on the deal would be appreciated. Here are the details:

All units are fully occupied, 1 BR/1BA x 8

Listing Price: $250,000

• Gross Rent: $3,495/mo or $41,940/yr
• *Operating Costs: $1,130/mo or $13,560/yr
• Net Profit without financing: $2,365/mo or $28,380/yr
• Fair purchase offer would be...? (I'm thinking no more than $236k)

The building is all brick and has a new roof installed. Rent is currently under market at about $436 each, market rate is currently $475. 

*Operating cost includes management fee, maintenance, and accounts for an 8% annual vacancy loss.

I'm seeking commercial financing for the property. Since this will be my first commercial loan, I'm not too familiar with this side of the game. Would I still need to put down about 20% typically? What purchase price would make this deal enticing? The figures mentioned above don't account for financing, property taxes, and insurance which I've estimated to be about $1,600/mo on a 20 year note at 5.2ish%. What should I consider when negotiating this deal, I'm sure there are aspects to commercial real estate that I wouldn't be able to think of off the top of my head. Would love to hear your experience and wisdom before I make an offer on this property. 

Thank you all in advance, 

Navid

[Bjorn Ahlblad]

@Navid A. Congrats on finding a MF property. I think you shoud re-visit your operating costs. More often than not they will be 50% of gross income. Go to the BP calculators and input the expenses including capex, insurance, property tax, water and sewer and all the other stuff to get a better number. That property looks will still make money, just give you a better number. You will also need to cover the debt repayment as far as an offer is concerned don't think too much about the listing price. You need to arrive at your number. 

Verify the rentroll and the actual financials, get a professional inspection. The lender will do an appraisal. Is your agent helping you arrive at an offer? If you don't have a 'buyer's agent' you might consider getting one. It is better to offer low than high-or you will never know where the floor is; and don't worry about offending the seller; this is business.