Deal Analysis - Foreclosure Duplex

[Andrew Baines]

Working on analyzing a project that my partner and I want to put in an offer today.  It's a foreclosure in an established area of the Detroit suburbs.  One of the units is currently occupied and the other is vacant.  The current tenant is paying $715 / month, on a month to month lease. The below assumes 50% of the gross income from the property goes to operating cost and taxes.

Any thoughts would be great.

Date:	4/18/2016
Project Name:	26531 Coolidge Hwy
Number of Units	2	Going in Cap Rate:	8.3%
Year Built	???	$/SF	$130.208333333333/SF
RSF	768 RSF
Acquisition Uses and Sources of Funds
Uses of Funds			PSF	Nominal Value
Purchase Price			$130.21	$100,000.00
Acquisition Costs			$3.26	$2,500.00
Renovation Budget			$10.42	$8,000.00
Other			$4.16	$3,197.75
Total Uses of Funds	$113,697.75
Sources of Funds		% Total Cost	Interest Rate
Total Equity (includes Acquisition Costs)	25%	$28,424.44
Mezzanine Loan Amount		0%	0.00%	$0.00
Total Senior Loan Amount		75%	4.50%	$85,273.31
Total Sources of Funds	$113,697.75
Income		Monthly Rent	Annual
Two Bedroom Units	2		$715.00	$17,160.00
Gross Potential Rent (GPR)	$715.00	$17,160.00
Other Income				$0.00
Gross Potential Income	$17,160.00
Less: Vacancy & Collection Allowance		5.00%	-$858.00
Total Income	$16,302.00
Operating Expenses (Detailed Below)
Total Operating Expenses				-$8,018.00
Net Operating Income (NOI)
NOI				$8,284.00
Net Income (Pre-Financing Costs)
Net Income (Pre-Financing Costs)			$8,284.00
Financing Costs (Taken from Financing Section above)	Monthly	Annual
Financing Costs			-$432.07	-$5,184.81
Net Income (Post-Financing Costs)
Net Income (Post-Financing Costs)	$3,099.19
Initial Period Metrics
Unleveraged Cash on Cash Return			7%
Leveraged Cash on Cash Return				11%
GRM (On Purchase Price)				5.827505828
Percenatage of After -Tax Income	$45,000	28%		26%
Pre-Tax Monthly Cash Flow per Door		$129.13
Discount Service Coverage Ratio				1.60
IRR				17%
Cost/Unit				$50,000.00