7-Unit SFH Portfolio Deal Analysis

[Pete K.]

Good Morning!

I need some help analyzing a deal for a 7-unit SFH portfolio in GA. We are currently negotiating on price with the seller and I just need some smarter people to help make sure I am on track for success (hopefully!). The properties are all SFH ranging from 1100-1400 sq ft, all 3 bedrooms, and some have 1 bath some have 1.5. All are currently rented. Here are my numbers:

Current Offer	$247,000.00
25% Down	$61,750.00
Closing Costs	$8,000.00
Gross Operating Income	$4,495.00
Taxes	$309.03
Insurance	$560.00
10% Management	$449.50
10% CAPEX	$449.50
5% Vacancy	$224.75
NOI	$2,502.22
Debt Service	$1,222.57
Cashflow	$1,279.65
Per Property	$182.81
Cap Rate	12.2%
Cash on Cash Return	21%

The seller's last counteroffer was for $265,000. So that changes the numbers a little bit. I am aiming for 12% CAP Rate on this one. Rents are right around where they need to be for the market. I may be able to raise them just slightly. Area appreciates about 1-2% per year. '

I'm interested in what you all think. Please let me know if you see errors or if I am missing things.

Thanks!

[Ryan Murdock]

@Pete K.  Estoppel certs are completed by the tenants prior to closing and are a clear way to make sure everyone is one the same page.  It helps to avoid disputes after the sale. (Seller tells you he's holding a $200 sec dep but 6 months later when the tenant moves out they claim to have paid a $500 deposit and want it back....). Details will vary so modify this as you see fit should you choose to use it. 

TENANT ESTOPPEL CERTIFICATE

TENANT: ______________________________.

PREMISES:

TO: Landlord:

Tenant hereby certifies that:

1.I, _________________ am a tenant at (address….).

2.There is no written Lease or rental agreement for my apartment.

3.My current rental is $_________ per month payable in advance on or before the first day of each month. In addition, I pay for electricity and other utilities. Heat and hot water is included in my lease agreement.

4.I did not make a damage or security deposit to the landlord in connection with my apartment.

5.I do not know of any legal claims against or unresolved disputes that I have with the current landlord.

6.My current phone number is ______________________

Dated: __________________, 2017

By: ____________________________________

Tenant Signature

__________________________________

Print name as signed above