Multi Family Deal Practice #2

[Chukwudi Motanya]

Hi All,

I want to get into buying Multi Family properties, and I believe the best way for me to get used to analyzing multi family properties will be to analyze 100 different potential deals so I get used to crunching the numbers.

I already invest in single family houses, but now want to upscale. I am used to crunching the numbers for single family houses, but not so for multi families. I want to run it by the community to get some feedback so I get practice and get better

Here is my second property:

From this listing it is an 89 unit, building size is 42,720 Square Feet, it was built in the 1967, occupancy is 100% and average rent is $695, but we are given that NOI according to seller is $456,000 which makes for a Cap according to seller of 6% and purchase price of $7,600,000.

Annual Gross Potential Income = $742,260

Gross Expense: (Assuming 50% expense prediction, right now seller is saying 38%, we would need breakdown on what is included in expenses and we what recurring and non recurring) (371,130)

Conservative NOI: $371,130

Conservative Cap: 4.9%

PITI Payments: (367,186) (Assuming 5.5% interest and 25% down)

Net cash Flow per year: $3,944

Would not cash flow based on this number. But interesting thing to look into is that fact that it is a Class A property. They are saying 38% for expenses.

What should I be looking out for / what may I be doing wrong?

Best,

Chudi