.5% Vacancy Estimate ...Crazy??

[Mark Robertson]

A new crowdfunding deal (I will not name so I will not have to deals with lawyers etc., again) is for a fund to buy up 24 multifamily units located in Drexel Hill/Upper Darby, Pennsylvania. 12% preferred, then 60/40 split (60 to investor)

• Internal rate of return in excess of 15%
• Minimum cash-on-cash return of 10%
• 1- to 6-unit multifamily buildings
• 5% loan at 70% LTV, amort over 25years
• Trailing Cap Rate 8.63%

These are a few of the assumptions that I am I am having a problem with:

1. Economic Occupancy is 99% for the next 5 years. (.5% for bad debt and .5% for vacancy)

2. Rent Growth 2.5% a year

2. Expense growth 1% a year

To anyone that owns or manages small multifamily units, do these assumptions ring true to you?