West Allis 4-plex Analysis-Comments/Suggestions/Feedback Please!

[Nathaniel Taylor]

Hey BP Family,

I was hoping to gain some review of this deal in a class C neighborhood. I know the 1bd is a drawback.

4 Unit in West Allis
Asking - $335k
NOI - $19,666 Cap rate - 5.8%

All 1bd/1ba

Rents$625- $625 - $625 - $695

Proforma *after increasing rents*

NOI - $24,826 Cap rate - 7.4%

Expenses 

Taxes $5,291  Insurance $1,415 Water $869 Electric $1,309 Maintenance $2,290
Gross rents - $30,840 Expenses - $11,174 NOI - $19,666

Any feedback, comments, or suggestions would be much appreciated!! Thank you!!

[Tim Herman]

@Nathaniel Taylor missing some soft cost numbers. No vacancy,capex or management. 5% vacancy is the equivalent of $150 per month. 5%*gross income. Can you do turnover for $1000. A 5% vacancy is  the same as 1 turnover every 20 months. 5/100=1/20. 4units*$1000=$4000/20 months = $200 per month and that doesn't cover clogged toilets, broken burner or leaky faucets. Add another $20 per month to be safe.

Capex the silent killer of cash flow. There are expected lifespans of depreciable items. Floors, roof, appliances, hot water heater, hvac, etc. Go to your favorite flooring store and ask what the commercial warranty. Most will be 10 years. So that is the lifespan. Assume 500 sf of flooring need to be replaced. My area it costs $6 sf. 2000 sf*$6= $12000/10 year life span/12 months in a year= $100 per month for just 1 item in a capex budget.