Apartment Analysis Help!

[David Roberts]

In the midst of looking for my second SF Rental, a possible special deal fell into my lap, but I'm not sure I know how to analyze it correctly.  My girlfriend's mother's friend is retiring and getting ready to put their apartment complexes up on the market.

They have 3 4-unit buildings, 1 of them is on another street from the other 2.  

They are asking 200k per building (50k per door).

Here are some figures from the owner:

All units are 1-bedroom about 700sqft each

Monthly Average Rent: 525

Annual Property taxes: 7000

Annual Insurance: 1500

No property management (owners do all the work, former construction guy)

Owner didn't go into operating cost detail, but stated "WHEN" they had a mortgage (assuming they no longer do), but BEFORE maintenance/vacancy they were at 15k income.

I plan to finance with conventional if I can even do that on a complex building (no idea how a lender views this type of loan).

I'm coming up with 1542.97 for the PITI...and I used 5k in maintenance/vacany planned cost.

Is this a good deal?  What would be a good cash flow per door for an apartment complex, a small one like this?

I like to get 300/ Single Family Home...is it comparable?

[Jason Bott]

@David Roberts 

You will want to get your own insurance quote as it looks like the pricing is "Grandfathered".  In the economic downturn the insurance carriers were looking for insurance premiums which created downward pressure on the premiums.   Now all of the insurance companies are showing a loss on this business and rates are much higher for new biz.

@ 700 sq/ft per unit = 2800 sq/ft.  The insurance carrier will most likely ask for $90-$100 per sq/ft, or $252k-$280k for Replacement Cost (which most banks seem to be requiring of late).  A competitive "new Business" rate is $0.30 per $100 of value, or $756 - $840 per building or $2268-2520.  Please note that older roof, fuses, building age greater than 50 years old can all drive the price higher.  Also keep in mind the underwriter will be underwriting you and your experience with multi's. 

For all these reasons I suggest to use a conservative annual cost of $3,000.  Hopefully I am wrong and you can get the $1500:)  Good Luck.