Chicago - Englewood - Multifamily - Buy and Hold

[Leslie Frieze]

Hi -  We are under contract on our first buy and hold that we have been able to find that has decent numbers...Would appreciate any reaction or input anyone has to this deal...good/bad/bad assumptions etc.

Location - 63rd and Halsted (very close to the new whole foods development

Property - Grey stone with 2 units (3 bed/1 bath) unfinished basement with laundy and 2 car garage.  Owner doesn't know exactly when remodeled but likely between 2009 - 2012 so is in pretty good condition.  One unit is owner occupied right now and 2 one has never been rented.  

Price - 105,500

Financing - 25% down at 4.625

Rents - $1000 per unit so $2000 monthly...hoping that is conservative but curious thoughts...

Vacancy Assumption - 6%

Repair Assumption - 10%

CapEx - 6%

Property Mgmt - 10%

Cap Rate - ~9.5%

As always appreciate the feedback.

Thanks-Leslie

[Mike B.]

I would suggest you find your property management company before you even look to purchase. Be sure to put them under the fire. Look at properties they are currently managing, talk to the tenants and the owners. Property management will make or break the investment. 

Also, without seeing the property, I would assume a 10% repair estimate is very low. Most properties in war zones (that I've seen) were rehabbed with bubble gum and duct tape. Make sure you get an inspection and reevaluate that 10% estimate.

Best of luck.