New to REI - Multi-Family Question

[Michael Prim]

Hello BPers!

New to the REI community and looking to get some great guidance and advice from the seasoned vets and learn as much as I can.

Have been doing some initial research into Multi-family, buy-and-hold, (>,=2 units) in the Chicagoland area (mainly western suburbs, Brookfield, LaGrange, Downers Grove, Wheaton, and the like) and found some units with potential.

Here's my current question:

I've found a property that I believe has some potential. It appears the units are below market, however with some cosmetic repairs and perhaps some capex's I feel I could increase the rent by at minimum (based on local comps) 68%.

I would offer 85% of list and estimated $20,000 in repairs/upgrades (this is probably a generous estimate - the property appears to be in good shape, basically needs a face lift).

With all these figures, including the 50% rule, financing with 20% down @ 3.5%, I come out to a profit of $262 per unit and a cash-on-cash return of 9.53%.

So, does this seems reasonable? Is it wise to project future rents? How about offering 85% of list - too high? should/could it be less (I'm leaning yes.)?

So for you Chicago investors - any comments? Anything I should be wary of?

Thanks so much!

Mike

[John Casmon]

Ignore the list price, use your own numbers to determine your offer price. How many units is the building?