Dallas Fort Worth Multi-Family Valuation Expierment

[Logan Hassinger]

The purpose of this post is to see the difference in valuations from one investor to another. My thoughts on the DFW MLS listed properties is that a majority of the sellers are very unrealistic with list price and are only being fed this number by an inexperienced broker/agent. This is an MLS listed property so everything is out in the open. It's actually two separate listings and each is a four-plex. I will provide the numbers and details of the listing but you are welcome to view it as well. The exact location of this deal is Irving, Texas.

List price $289,000/building ($578,00 combined)

MLS # 13131613 & 13131606

Seller is not willing to divide properties up. See the following specs:

2 Bed/1 Bath

Rent/unit: $650 (well priced for area)

Units: 8

Taxes/Building: $3770 as of 2013 (City of Irving tax rate 2.69% of assessed value)

Given Expenses: $1,150/building in Insurance, $50.00/building in lawn care

Tenant pays all utilities (separately metered)

My total valuation is $286,000. I arrived at this number with estimated expenses of 50.5% (just a coincidence from the 50% rule), and Commercial financing with 25% down.

I know everyone's financing is different so try not to hammer me on that. A simple reply with your purchase price and a brief summary of how you got there but summary not required.

Ready, Set, Evaluate.

[Roy N.]

@Logan Hassinger

Revenue:

Scheduled rent:   $5200/mth     62400/year

Vacancy:              $520/mth       6240/year

Gross revenue:     4680/mth       56160/year

Expenses:

Property Tax:     628.33/mth     7540/year

Insurance:          191.67/mth     2300/year

Lawn care:          100/mth         1200/year (was your $50/bldg a monthly figure?)

Maintenance:     468/mth          5616/year

Property Mgmt:  468/mth          5616/year

Water/Sewer:      240/mth         2880/year  {this figure was missing in your OP}

Electricity:           100/mth          1200/year {there will undoubtedly be house meters}

Gas:                    ??/mth            ???/year (laundry with a gas water heater or dryer?)

Total:                  2196/mth         26352/year

NOI: 2484/mth 29808/year (53.1%)

It is most probable the utility numbers (water/sewer, electricity, gas) are underestimated.   

From the remaining 46.9% you will need to make debt service, set aside your CAPEx reserve and pay income taxes.