2nd Multi-Family... Thoughts?

[Greg B.]

Hi BP Community! This is my first post, I've learned much from the site, so thanks for everyone's contributions.

My partner and I are about to purchase our second multi-family house in Bushwick, Brooklyn. We currently have a fantastic 3 family in Williamsburg, where we live in one unit and rent out the other two. Real estate has been a great investment for us, as the rents on our Williamsburg house pay all expenses in addition to paying us a handsome profit.

We're almost in contract for the new house in Bushwick, which is near the Halsey J train. It's also a 3 family and was gut renovated 2 years ago. It is currently occupied and the rent roll is 8100/mo, which seems to be below market rate. The cap rate is 7.8% and price per square foot is $285, which also seems to be lower than much of what is on the market for renovated houses- new renovations are ~$400+ I'm projecting our ROI will be 8.8%, using the current rents.

We're having an engineer inspect the house tomorrow, and our lawyer is reviewing the leases... My understanding is that 2 are m-to-m, and only one has a few months remaining.

This seems like a great deal, with potential for upside on the cash flow and equity return. However, I'm wondering if we're overlooking anything and wanted to get the BP community's thoughts on the deal. Nothing is signed yet ;-)

Thanks in advance for your thoughts!