Underwriting a $5.95 Million Dollar Property With a 5.05% Cap Rate

[Sheldon Alex]

Good day everyone! I thought I'd share a few deals from time to time of what I'm underwriting to help anyone out who's learning how to underwrite and comp deals. Here's a first...

Throughout the year's I've ran numbers on numerous properties, single-family and multi-family. This is the first one I wanted to share, a multi-family property in Tampa, Florida.

The subject property has been on the market well over 120 days. Why? Because of the seller's asking price.

With a $5,950,000 asking price and only a 5.05% cap rate, after just calculating the value, the property is over priced by over $2 million!!!

Mind you, they were offering seller financing. But after running the numbers, even with seller financing, which you can find in the images, this opportunity is a NO GO!!

Always important to see what's under the hood, and not act based on what's shown on the surface. 

Anyways, would love to get your feedback on the matter. More of these scenarios to come soon!!!

PS: I made a mistake on the Cash to Close section. This scenario I set (even though this property is really listed for this much), I factored in the investor not coming in with any money but instead using 4 PMLs.