6 Unit - Deal Analysis

[Kyle Cabral]

Hi All,

I'm in preliminary talks to pick up a 6 unit with 15% carry back option with another 5% down from another investor, leaving me with 5% skin in the game. I was hoping if some people on BP would take a look at the following two analyst spreadsheets I used and let me know if they have any red flags.

Assumptions

1. Tenants pay utility, electricity allowance for common areas
2. Gas, allowance their for padding. Requiring tenants to pay utilities
3. 10% prop management, 5% maintenance, 5% capex, 5% vacancy

Plan is to refinance into one loan within 2 years and pay off secondary liens.

On second spreadsheet, just focus on additional mortgage scenarios and right hand column.

Thanks to everyone in advance for taking a peak.

Spreadsheet 1

Spreadsheet 2

Kyle

[Michael Sjogren]

Hi Kyle. I am actively pursuing opportunities in the Fall River market as well. Your analysis looks good right around that 50% expense ratio. Regarding vacancy, on these smaller multis my rules of thumb are 10% vacancy. Capex can range depending on the asset but 10% of rents or $250-350/door is my rule of thumb.

Insurance, I'll take 80% of the sales price x the city's mill rate. You can look up the mill rate (property tax rate) on the city's tax assessor page. Depending on when the property was last sold and when last assessment was done, this could be a big swing to your bottom line.

Depending on the asset and tenant base, I also budget for attorney fees for evictions $150/door. Also, don't forget to budget for due diligence and closing costs in your cash on cash analysis. This includes inspections, environmental Phase 1 (possibly Phase 2), attorney fees, bank fees, etc. I put in 4.5% for these fees. I ran the deal quickly using 50% expense rule with updated closing costs, vacancy & capex. If you are rehabbing the property right out of the gate, then you can probably pull back the 10% Capex but I always go conservative. Hope this helps.

Acquisition Cost
Price	$230,000
# Units	6
Price Per Unit	$38,333
Downpayment %	30%
Downpayment $	$69,000
Loan Balance	$161,000
Estimated repairs	$20,000
Estimated closing costs 4.5%	$10,350
Acquisition fee 3%	$0
Total Member Capital Needed to Close	$99,350
Total Acquisition Cost	$260,350
INCOME
Gross Potential Income	$54,000
- Vacancy	($5,400)	10.00%
- Concessions, Loss to Lease, Bad Debt	$0	0.00%
Effective Gross Income	$48,600
Other Income	$0
Total Net Income	$48,600
EXPENSES
Total Expenses (Manual Override)	$24,300	50.00%
Net Operating Income (NOI)	$24,300
Summary
Debt Service	$11,864
Interest Rate	5.50%
Term / Amortization (Years)	25
Capex Replacement Reserves (10%)	$5,400
Cash flow after debt service & Capex	$7,036
Cap Rate (NOI/Sales Price)	10.57%
Cash on Cash Return	7.08%
Debt Coverage Ratio	2.05