Analyze my deal with me? 39 unit property

[Meghan McCallum]

Hey guys, I'm looking to jump into the larger multi unit arena and really just don't know how best to analyze a deal. Gosh, I sound ridiculous saying that, but I've been buying MFs and SFs and I have the money and thick skin to go bigger. I would want to be as hands off as possible as I'm trying to remove some of the stress of failing contractors and bad employees. Is there a great formula to analyze bigger deals?

This is in a city with a 400,000 person 20 mile radius in the midwest, it is predominantly blue collar and military, it is 39 units 9 garages

Here is the one I like most:

Efficiency 2 @ $430= $860 Local average $450

1 Bedroom 20 @ $551 = $11,020yr $550

2 Bedroom 17 @ $617=$10,489yr $670 +- 3%

Laundry Income = $360yr

Carports & 9 Garages

Less Vacancy % 4 = $909

MONTHLY Income $22,729

YEARLY $261,838

Expenses

TAXES 2015 $42,300
INSURANCE *REPLACEMENT COST $18,700
WATER/SEWER $12,223

GAS/ELECTRIC $18,329

WASTE $7100

MAINTENANCE/ SUPPLIES / CAP IMPROVEMENTS/ ROOF/ GUTTERS/ ELEVATOR $22,7k

MANAGEMENT *6% $15,382

SNOW/LAWN CARE $2,305

LEGAL/MISCELLANEOUS $2,592

TOTAL EXPENSES AND % OF INCOME 54% $141,556

This is located aross the street from a catholic church and grade school on a semi busy street. It is in a B+ neighborhood in a C city.

Two Buildings Built 1968 & 1964 Newer window throughout, some flooring replaced

SELLER ASKING $1,200,000 MAKE OFFER
ESTATE SALE!!

What questions should I be asking? Is this a deal? What would you offer?

[Adrian Stamer]

Vacancy and maintenance/capex appear low. Possibly management too

At first glance gross income compared to purchase price does look decent. Certainly worth investigating closer

[Zach Quick]

@Meghan McCallum Have you seen the property yourself inside and out? 

What repairs and CapEx will need to be done immediately?

Will you be able to justify a rent increase following take over? At $30,769 per unit there seems to be some potential but it's hard to say without knowing the general condition.

Also, are you sure that figure is right on laundry income?

[JJ Conway]

Disclaimer: I've not bought multifamily yet but have arranged retail/office space deals.

At first glance the numbers look reasonable. Though vacancy seems low if it's high military tenants. Definitely do what you can to verify rent and income numbers. I've been in an experience where seller falsified the rents of a retail strip we were trying to buy - and I knew because my church was one of the 3 tenants and we knew what the other two were paying for rent. Short of getting copies of the leases and expense ledger that's tough to do. Also, you want to know if those are the lease values or actual income coming in (lol). Please keep us in the loop - I'd love to hear how it works out for you.

[Meghan McCallum]

These numbers are part from pro forma, part from seller disclosures. I do know I can get management for this property around 7% perhaps even better. I will definitely add in a contingency to see the proven rent roll and other expense documents to the offer.

[Meghan McCallum]

These numbers are part from pro forma, part from seller disclosures. I do know I can get management for this property around 7% perhaps even better.