Madison Suburb Multifamily Deal Analysis

[Rocky Jones]

Hey All -

I'm trying to analyze my first "off-MLS" deal and would love your thoughts. What am I not taking into account and what assumptions would you change? I'm expecting to do a traditional 20% down mortgage (and looking to do seller financing for the 20% down) but am open to other options including a VA loan or a more "creative" option.

- The seller has 2 duplexes that appear identical in Columbia county between Madison and Lake Wisconsin.

- The pro forma rent is listed for $975 / month (estimated from gross income).

- Each unit is 3BR / 2BA,1200 square feet.  Each unit has it's own 2 car garage.

- Taxes in 2015 were $5500.

- All utilities are paid by tenants.

- The seller has up to 10 more units available in nearby towns between Madison and Lake Wisconsin including an 8-unit and another 2-unit.  Maybe a better deal could be made by buying more units from the same seller?

- Each duplex is offered at $225,000.  I ran the BP Rental Calculator with the assumptions:

Vacancy: 10%

Repairs & Maintenance: 10%

Capital Expenditures: 10%

Property Management Fee: 10%

Annual Income / PV / Expenses Growth: 0%

Sales Expenses: 0% 

Having never bought a unit, I could definitely use any insights into the assumptions for this area.  What would you change?  Thanks in advance!

[Mitchlyn D.]

It seems 'okay'.  But honestly, it's not enough skin on the bone in my opinion.  What are other similar properties appraised at?  Can you reduce the downpayment, collect the cashflow then finance in about 5 years?