27 Units SW Florida - Help Me Analyze This Deal - Raising Capital

[Matthew Ringer]

Looking at a 27 unit complex in SW Florida. Two and three bedroom town homes, built in 2016 & 2017. Have the rent rolls and financials since inception. Fully rented with average rent of $1550. Vacancy running around 5% (limited operating data but this is in line with market for the area). Property is in a great location, close to employers, the beach, shopping etc. Would attract retirees and younger professionals. Expenses have been running 25% of gross rents. ~$483,000 gross rents, ~$123,000 annual expenses (includes prof mgmt @ 10% of rents). Off market buying direct from the developer who wants cash out to move on to new projects. I've reason to believe we can close the deal in the $4.5-$4.75M range. Going in cap roughly 7.5. Market caps for the area have been in the 6-6.5 range and at the lower end for new build, in strong locations like the subject property. Conservative market value estimate $5.5M. Property should easily support debt at 75% LTV. Would be looking to raise ~$1.2M of which $500k coming from personal funds. I'm based in Portland, Oregon but have other properties in SW Florida and have been invested in Florida for almost 20 years. Also have people on the ground in Florida I've known for several years, done deals with, and trust. So even though I'm out of state this is not outside my core competence.

Thoughts on the deal? 

[Tyler Kastelberg]

@Matthew Ringer

Upon first glance, your operating expense ratio looks low. 

You might consider running this by a few property managers in the area. Do you have a favorite picked out?

Put your operating strategy into an underwriting model. If you're planning to hold in perpetuity, use year 10 as your "hypothetical" sale date. This will help you measure how viable this deal is given various financing and downside scenarios.