Help analyzing a 6plex

[Travis White]

Hi everyone

My direct marketing campaign so far has been a like fishing with a net - sometimes the deals that are on offer aren't what I'm used to and I could use some help thinking through the numbers on a 6-plex. Here's what it looks like:

Purchase price = $300k

Rental income = 4 x 1bd/1ba @ $500 , 2 x 2bd/1ba @ $650 = $3300, seller thinks  1bd's can go up to $700 and market research supports that 

Taxes = $200/month

Estimated expenses = 1300/month (10% each for vacancy, CAPEX, and repairs and $200/month for insurance)

NOI = $23k at lower rents, $33k at higher rents

Cash flow = $500 at lower rents, $1300 at high rents

The property is in a C neighborhood that is gentrifying. Many tear downs in the neighborhood that are being replaced with townhomes. What other info can I provide? I'd love any/all feedback/questions/anything on the deal as I'm going to need to make a decision in a couple days. I'd also appreciate any general reading advice for analyzing multiplexes and potentially coming up with a counter offer.   

Thanks so much! I'm off to go dig around BP for more info on multiplex analysis!

[John Leavelle]

Howdy @Travis White

I did not see Property Management, utilities, lawn care, or other miscellaneous expenses.  Does the property require Flood insurance?

What is the Market Cap Rate for that area?  C area I would expect somewhere between 10% and 15%.

Have you received any financials from the seller to show actual numbers?  Sellers always make the numbers look better than they actually are.