Deal Analysis Multi Family (Noob)

[Bobby Thompson]

Hello Everyone, Doing a lot of deal analysis for practice. Cranking out a few a night. Getting close to my first deal. Came across this 6 unit multifamily (all 2 bed, 1 bath) in a B class neighborhood. Its in a nice area and seems to be in great shape. Going to look at it this weekend. 2 of 6 apartments are leased until Dec. The rest are TAW. I'm sure I missed something or provided unrealistic estimates. I would really appreciate your feedback. 

=====The Damage======

List Price: 475,000

Ask Price: 435,000 (30 year, 20% down, 4.3%)

Down:       87,000

Closing:    4,000

Repairs:    2,000 

=====Monthly Expenses=====

P&I:         1,722        Vacancy:        300 (5%)  

Taxes:     710           Cap/Rep:       600 (10%)

Insur.:     441           Waters:          250 

Mgmt:     600           Elec:               89

                                  Gas:                89

Total:       4801.15

=====Dat Rent=====

6 units, 2 bed 1 bath, $1000 each (Conservative for the area)

Total: $6000

=====The Numbers=====

 CashFlow:        1198.85 (199 a door)

CashOnCash:   15.47%

Cap:                    8.06%

2%Rule:             1.36%

[Jake S.]

Hey Bobby! Congrats on that find!! In MN, I found a duplex for $365k, so Im jealous of you haha

Okay, so 1 thing I noticed right off the bat, is the finance terms will likely be different, due to it being over 4 units. You will need a commercial loan (I believe) for this, which involves higher interest and usually a shorter term. Again, i'd double check this, but I am pretty certain on it.

Maybe bump up repair costs a bit, since it is 6 separate units, and you may want to do some updating and what not. Doesn't hurt to be conservative in running the numbers

I believe everything else looked pretty good!