Help analyzing an off-market 15 unit complex

[Joshua Feit]

Hi there,

I have run my calculations over and over on a 15 unit off-market deal. The deal doesn't seem great to me, but I am trying to be VERY conservative on the numbers. Here are the facts -- I would love to know what you think about this one:

PROPERTY:
15 units in three identical buildings, all 2/1, vacant. 14 units need light rehab (less than 5K each), and one unit had a fire in it (needs estimated 25K rehab). Purchase price is 200K. Seller wants 50K down and 5% to hold the paper on it for a year during the rehab, and then we would refinance it out once it is rented / stabilized. Estimating the ARV at $360,000.

RENTS:
Rents in the area for similar units show a wide range -- $350 - $550. I'm guessing these would rent for $450 a unit, maybe $495 if we got lucky.

NEIGHBORHOOD:
C at best, and will never appreciate. This is in the rural south in a small city. Definitely a lot of low end rentals around.

EXPENSES:
Taxes: 5000/year
Insurance: 300/month
Landscaping / Trash: $400/month
(All other expenses separately metered)
Vacancy -- budgeting for 15% (figuring 2-3 units may be vacant at a time)
Repairs -- budgeting 15% (around $1K/month)
CapEx Savings Account -- budgeting 15% (around $1K/month)
Management Repairs -- budgeting 15% (7% per month, plus one month rent for all new placements

Thanks for taking a look, and please send me your thoughts!