Looking to gaining experience in running numbers for Multifamily

[Fran Arti]

Hi!

I have been reading and doing research because this year I will start my investment ¿career? :D

I just browsed on loopnet and did some numbers in the very first investment that popped up. Is this: 

https://www.loopnet.com/Listing/75-Ashmaline-Ln-Oxford-AL/16765932/

The listed price is 5.1M for a 46 units, built in 2018, fully occupied. As you can see in the Excel screenshot, I put all the data that the ad provides (460K gross income, 112K expenses, 348k for NOI. Supposing I close on 4.8M, putting 20% down (960K), the loan amount would be 3.84M. Calculating at 4,5% interest rate for 30 years, the yearly debt service is 234K. My question is:

I suppose that in the expenses the broker is considering doesnt include reserves and savings for capital expenses, for example) If I consider half the gross income as expenses instead the 112k, besides the yearly debt service, my cash on cash return would be negative (-0,36). 

This would be as advertised:

Can somebody guide me, please? Thanks in advance!

[Bjorn Ahlblad]

@Fran Arti you have found something very typical actually. The rents do not support the asking price and the seller flavors that by minimizing expenses and allocations. In reality a newer construction should have lower operating/maintenance expenses but you will get vacancy especially now with Coronavirus, and you need to build capex reserves. Keep up the good work!