Feedback on numbers for 8 unit CT multi-family?

[Dave A.]

Hi All,

After a couple years of research, I'm finally comfortable that I've found my preferred niche' in commercial multi-family and I'm ready to make my first purchase. Big problem: no multi-family in my area and low ROI in general. Solution: neighboring states.

I've not verified these numbers that I've received from the broker yet, but the annual expenses seem low to me. Any and all feedback will be greatly appreciated. Not only opinions on the numbers for this specific deal but also advice as to the best rules of thumb to use for vetting out the potential duds would be great.

Sales Price	$525,000
Loan Amount	$420,000
	Down Payment	$105,000
Interest Rate	4.60%
Loan to Value	80.00%
8 Units (7 Apts/1 Retail)	Term Mo.	360
Gross Income
Total	$108,000
Gross Income	$108,000
Residential Vacancy 10%	$10,800
Capex 5%	$5,400
Total	$16,200
Effective gross Income	$91,800
Expenses Annual Figures
R/E Taxes	$8,640
Insurance Premium	$4,200	(Estimate)
Maintenance	$5,400
Water/Sewer	$2,220
Gas Heat	$3,530
Common Electric	$350
Management	$5,130	(5% EGI)
Garbage	$1,105
Total Expenses	$30,575
Net Operating Income (NOI)	$61,225
Principle and Interest Pmt	$25,837.28
NOI/PI	$25,837.28
Debt Service Coverage Ratio	2.37
Monthly mortgage payment	$2,153
Net income after mortgage	$35,388
Return on investment (ROI)	33.7%
Cap rate	11.7%

[Filipe Pereira]

Originally posted by @Dave A.:

Originally posted by @Filipe Pereira:

Originally posted by @Dave A.:

Thanks guys, feedback greatly appreciated. 

Felipe, this property is in Willimantic. $3k seems monstrous. Are tennant-paid utilities, particularly water, not typical in CT?

 Water (cold) is almost never paid by tenants. Buildings typically aren't submetered by the unit for water. Of all the properties I've ever walked through, I've only seen ONE that had water submetered per unit. Gas and Electricity are much more likely to be submetered. 

 
Got it, thanks. I'll be in a meeting with my CPA most of the day tomorrow but I'd like to give you a call for more info within the next few days. When is the best time to reach you?

Preferably when I'm awake :) 
Really though, I'm flexible! Give me a shout when you're ready. 

Filipe