14 Unit Multifamily. Is it a buy?

[Dustin Moore]

Help me see something I might be overlooking :). The complex... •Has 14 units (10-2br1ba, 4-3br1ba) •100%occupancy (good rental history - not less than 90% in past 5 yrs.) •$8995yr Taxes • $8000yr Ins Total Yearly Rent Gross - $90,000 (between 500-550 per unit) Asking Price $499,000 I don't know about previous maintenance costs yet, but I do know that the units are in good not great shape. 10 units were built in 1975, and 4 more were added in 2002! The complex is brick, and is in a B+ community. Any feedback is appreciated! You guys are awesome! THANKS!

[Jaysen Medhurst]

@Dustin Moore, double check that occupancy and make sure it is "Economic Occupancy" (i.e. all the units paying all the rent), not "Physical Occupancy" (i.e. units are lived in, but paying late or not at all).

You have to get ALL of the properties expenses and income, for at least the last 2 years. Sometimes they won't be released until you make an offer, just make sure you have a due diligence contingency in your offer.

Based on that Gross Rental Income and taking into account the 50% rule, you're looking at a 9% cap. That's a little higher than normal. Especially, in a B+ neighborhood (typically 8% all things being equal, a bit lower in B+/A), but I don't know your market or the neighborhood. That might be right down the middle. You should confirm the local cap rate with your broker or a local property management company.