Fourplex Fixer in Port Orchard, WA; $145K

[Mike C.]

Fourplex Fixer in Port Orchard, WA; water view: $145K ask, $150-175K rehab, $380K ARV based on 7% cap

This is an exciting fourplex opportunity in Port Orchard, WA in Kitsap County - 1-1.5 hours from Seattle via car or ferry) which is in the middle of a complete rehab. An excellent value-add opportunity for a flip or long-term hold with great cash flow.

For-sale, asking price $145k or best offer. Estimated $150-175K rehab (with a GC), $380K+ ARV. Not financeable with traditional bank loans due to mid-rehab state, so I'd be looking for cash or I can recommend a hard money lender that is already familiar with the property.

7 bedrooms, 4 bathrooms. 3908 square feet. Original year built is 1935. Underwent a renovation in 1973. The current rehab project was started by the previous owners but unfinished.

Two of the units have water views. Quiet neighborhood with a good rental demand, given that it’s a 15 minute drive from Navy base in Bremerton and a 6 minute walk to the Annapolis Foot Ferry Dock.

There are also two smaller lots (one on each side of the property) which are included in the sale; possibility of subdivision should be considered.  There's a trailer on one of the lots that needs to be removed.

The main work to be done includes insulation, drywall, finish work, and sprinklers. Inspection and GC estimates are already done and are available for review. Rehab cost based on several GCs’ bids. Electrical and plumbing rough in is checked off. Framing should be once fire sprinklers are installed. Repair costs lower if you can do or sub out any of the work yourself.

Reason for selling: My partner and I originally intended to rehab and hold the property as a rental. We found that we would not have capital to fund the full rehab cost and decided we did not want to have an extensive rehab as our first project. However, because we had the price reduced low enough, we decided to purchase the property with hard money and are looking to wholesale it to another investor with rehab experience.

More pictures: http://1drv.ms/1NINgcH

Estimated expenses, assuming self-managed:

• Vacancy: $380 (10%)
• Insurance: $100
• Taxes: $3500/12 = $300
• Utilities: $150
• Maintenance: $380 (10%)

Income method of valuation, based on projected average rent/unit of $875:

• Cap rate (with maintenance expenses) - assume 7%
• Projected NOI = (875*4*0.9 - 100 - 300 - 150 - 380)*12 = 26,640
• Estimated ARV = NOI/cap rate = 26640 / 0.07 = $381k
• Note: Cap rate is based on 6 multi-family properties that sold in the last year in the in the Port Orchard and Bremerton area and rough estimates of NOI based the rents shown in the MLS listings, the sold prices, and assuming that NOI would be 60% of gross rents (e.g., "50% rule" with 10% not going to PM). The average cap rate from these six properties was 6.3%; using 7% as a conservative estimate from a valuation standpoint. ARV with a 0.25% reduction in cap rate is $395k.

Estimated cash flow based on a refinance exit strategy assuming 5.5% interest on a $295k 30 yr loan; self-managed: $575/month

Contact me ASAP for more details, analysis, pictures, video, context on why we're selling, answers to questions, etc. E-mail [email protected] or call 401-440-6845.

Buyer to verify all information.