Clinton Hill Brooklyn Deal Analysis

[Evan Ernst]

Hi Guys, I have an accepted offer on an off market townhouse in Clinton Hill Brooklyn. I'm brand new to all off this and although I think it's a good deal, it's still hard to get the numbers to look decent. Any advice would be greatly appreciated. it's a 2 family zoned as a 3 family which would only require light renovation and a kitchen install to bring it back to 3. 1.3k purchase price, I'm bumping to 1.32 and asking for a $20k seller concession to help cover closing costs (not reflected in spreadsheet). avg sqft price of neighborhood is between $650-$750 so at $540 it seems like it would be a good deal. Broker suggests it would probably sell open market for 1.65 and comps like appropriate but I just don't know. But looking at the spreadsheet below, the ROI is only 7% and the cash ROI less than 3%. I'm looking to buy and hold to develop equity and eventually have it as a cash flow property or something I can move up with in a like kind exchange, but I can't tell if this makes sense as such or if I should be trying to find something else. I kept my numbers really conservative. appreciation will probably be closer to 5% each year, and the rents in the area are between $2,000-$2,500 so I might be on the lower side for the units but I figured I would need to get things started and then could clean things up a bit over the years. Any thoughts? Maybe these numbers are actually good and I just don't know it. Sorry if this is a silly post, but I'm really trying to make heads or tails of this so I can move forward confidently or bail if it's stupid.