Evaluating my 1st Multifamily Deal

[Ryan Brown]

Hi All,

I am nearing an offer on my first multi-family deal in Riverton, Wyoming. I am doing my best to be thorough in my property evaluation and approach this as a business rather than a hobby, but recognize I offer no personal experience in this arena. I live out of state (California), have a buy and hold long term strategy, and plan to go the property management company route. The property is an 8-plex built in 1961 in moderate condition, all 8 units are currently rented. It is not on the market to my advantage so I am doing my due diligence to see if this is a good cash flow investment opportunity. I would like to do the deal through an LLC. Here are some specs:

List Price: $425,000

Estimated Annual Income with a 10% Vacancy: $54,996

Annual Expenses (include 10% property management, gas/electric/water/sewer/trash, taxes, insurance, maintenance [$100 unit/month = $800/monthly]): $22,550

NOI: $32,446

Cap Rate 7.6% with opportunity to increase current rent rates as multiple units appear 25% below market rates

Any advice/feedback is greatly appreciated as I am doing this entirely via ambition, reading books, and listening to podcasts (biggerpockets and wheelbarrow profits). Especially interested in major pitfalls to be aware of and lending opportunities for rural areas. For those questioning why I would invest in WY, I have family in the area that connected me with this property and the prices are not even comparable to the sky-high prices in California. Thanks!

[Ryan Brown]

@Evan Polaski

Thanks for the input! I plan on the management company to handle all the leasing, evictions, etc. If this deal were to go through as currently budgeted my capex reserves would initially be low around $2,500. I appreciate the consideration of expenses being light. I want to accurately account for as many expenses as possible to ensure the deal will always end up cash flow positive.