Analyze 5 unit bank owned property

[Jonathan Emery]

HI,

I'm looking at a 5 unit bank owned property.  This would be my first commercial property and I know there are some differences with looking at commercial properties.  Here are my questions.

Do I go by other comps in the area like you do for 1 - 4 units to get the ARV? as of now i have no other 5 unit properties to compare to

The property has two units vacant so do I only use the income from 3 units based on my offer?

I know a lot of commercial investors go by cap rate.  This is new to me too.  I'm looking at cash flow and as of now the cash flow isn't there unless I buy it low to where i do make so much per door.   

Rents are at near market rent, but includes heat and hot water.  It's an old building so it will need work if you were to break the heat per unit to pay.

This will be going to auction next week so if I were interested in putting in an offer it would have to be this week or do I just let it go to auction.

If you need more information please let me know I'll do my best to see if this will work or not work, but like I said I only see it working if buying low so I see the cashflow coming in.

Here are my numbers 

bank asking $169,000

there was a 4 unit that sold for $140,000 different style two ranchers and duplex.  The property i'm looking at is one house with 5 units in it and 10 car garage.

Thinking it may need $30,000 in repairs.  Furnace, hot water heater, roof, fire escape, $3000 per unit if needed to rehab and other various repairs

if all rented out $3835 total income

Expenses per month

Vacancy - 10% 383.50

Repairs - 10% 383.50

CapEx - 4% 153.40

Water - $300

PM - 10% 383.50

Property Taxes - $598.92

Electric - $45

Insurance $420

Gas Heat/Hot Water - $500

Thank you

Jon