30 unit Analysis

[Craig Hansen]

I would like to hear some feedback from the members.

I have an opportunity to purchase a 30 unit building in my Niche area. It is more then what I would like to pay per unit and the CAP rate isn't as strong as I would like it to be. The area I am in does not have a good appreciation value but the Rent to purchase cost is great. I can possibly cut some of the costs on snow removal, landscaping, electricity. There is also some room for rent increase.

Purchase Price

$1.6m

30%

30 yr @ 6% Interest Only 5 year balloon

Income (monthly):

$22,365 rent

$275 laundry

Expenses (monthly):

$797 Electric

$1,300 Gas (heat)

$800 Water and Sewer

$555 Garbage

$1,142 Insurance

$396 Snow Removal

$475 Landscaping

$356 Exterminating

$1,132 5% Vacancy

$1,584.80 7% Repairs and Maintence

$1,341.90 6% Management Fee

$2,567 Taxes

$5,600 P&I

Overall:

Monthly Income $22,640

Monthly Expenses $18,246

Monthly Cashflow $4,393

CAP Rate 7.48%

Total Cash Needed  $482,500

Cash on Cash ROI 10.93%

The building does have a flat roof that will need some repair in a couple years.  Some repointing of the brick facade is needed.  There is about 10,000 sqft of basement space that is not used.  Heat is provided by the owner but, each unit pays the electric to bring the heat to there apartment.  Windows were replaced within the past 5 years.  

The loan that is listed is not concrete, Owner financing may be possible.

Thank you for all feedback.