Feedback on Apt 6 Unit

[Alex Critcher]

Hello,

Im looking for some feedback and thoughts on a 6 unit apartment building that Im looking to at for a long term buy and hold. The property is located in Fairview Park. Outside of Cleveland. All units have been updated. Consists of:(4) 2 bedroom units and (2) 1 bedroom units. Most leases expire next year. 1 unit just went vacant, is rent ready and can be placed.6 garage spacesTurnkey unitsNew hwt’s, 1 new furnace.75% new windowsHardwood floors
Electric panels inside units are fuses. 5 furnaces are older. Currently owner pays utilities on executive rental, which I would turn into normal long term tenants. There asking for 450K

I've been pre approved for a mortgage on the property costing about 2,200 a month at around 7% interest rate.

The potential for the property is with increasing rents and cutting the expenses of the building. My current CoC return would start at 3% with potential to increase with those changes made. Please see pic below

Thank you and look forward to hearing from you all 

[Evan Polaski]

@Alex Critcher how old is the property?  I am not sure if what you included is your full budget or what, but it sounds like 5 furnaces will need replaced in the somewhat near future, and I typically spend 3500 per furnace for a replacement in my single families. 

Fuses could be an issue if the wiring is old.  Have you confirmed what type of wiring?  My insurance company, who used to be the only one that would insure knob and tube, now won't even insure aluminum common in the 50s and 60s, so that could be a potential large expense.

How is the roof?

The moral of the story, the unit renovations are great.  But honestly, depending on finish and size of units, the cost to upgrade units may be a drop in the bucket to everything else.  

Lastly, based on your landscaping budget, $40/month seems light.  Of course it depends on how much snow you get, but in Cincinnati, I have had years that were more than $1,000 in landscaping (snow removal and cutting grass only), particularly if bad snow.