First Multifamily, what am I forgetting?

[Adam Fansler]

Hi Gang,

I have only done a few single family properties up until now and am looking at some multis. I found a fourplex that I think is a deal but wanted to run it past my "partners" at BP. Property is in Columbus Ohio, in a blue collar neighborhood with not  a lot of appreciation potential.

Heres the nuts and bolts of the deal.

Offer price $135,000

comps $124-150k low side being REOs (not much equity)

Gross Income yr              $28,800

Minus Vacancy (10%)=   $25,920

Repairs, maintenance, property management (5%)                           

Taxes, insurance,advertising

CAPEX ($250/unit/year)

Total Expenses              $10,472

30yr mtg with 20% down at 5% payment would be $580

I'm coming up with cash flow of $176 per month with COC return of 25.4%

Any thoughts?

[Joshua Springer]

If you want $150/unit I think that's your answer.

Give yourself real numbers like you've now done on expenses and work backwards to your offer price that will net you $150/unit.  If that's not good enough to get your the property you should propably keep looking or lower your expectations...but don't change expenses just to meet your goals...that's the worst thing you could do.