Multi-Family Purchase Analysis

[Kris Miller]

I am new to BiggerPockets but looking for a second or third opinion on a multi-family purchase analysis in Fort Wayne, Indiana area.  I am looking at a 15-unit property.  I have run it through the BP Calculator using expenses provided by seller and some of my own assumptions.  Current monthly income is $10,225, my assumed operating expenses (excluding loan pmts) are $4,996.  Is there a quick way to calculate what I should offer or ultimately pay?  The property is off-market and this was the result of a letter so the owner is not extremely motivated to sell.

[Peter B.]

@Kris Miller

There really isn't a quick way to determine what to pay.... There are a lot of moving parts to multis. I would first verify the owner supplied expenses. My next move would be to determine your market cap. This will tell you what it is worth and most likely will sell for..

I would then go back to the expenses and income. Is there a way to reduce expenses?? Boiler upgrade? L.e.d fixtures? Low flow showers, 1.6 toilets? Is your garbage contractor fair? Is your snow/lawn contractor fair? Is there room to appeal your assessment?? Can you do better on insurance? Find something you can improve on..

I would next move to income... Are they at market? Could the units/building use any cosmetic upgrades that would merit higher rents? Can you improve on the occupency?? Better marketing?

If you can answer yes to a few of the above. I would then offer what the market cap and noi dictate.

Hope this helps.

Peter