Help me analyze this deal in Brooklyn, NY

[Mansi Kothari]

Hello there, 

I would appreciate some extra eyes on this deal. I've run it a few ways and would like to better understand if this deal makes sense in a market like Brooklyn. Welcome your thoughts and suggestions. 

Thanks in advance!

[John-David Herlihy]

I am relatively new to this and learning the ropes as well. @Mansi Kothari can you tell us how many units? I am taking a guess at 4, as you stated your occupation of 1 unit would be 1/4 of the total monthly income. If 4 units or less than you really need to use comparable sales to derive the value of the property, as this is what the banks will use. However, evaluating based on Cap Rate and NOI is fun and a good excercise.

I don’t completely follow the numbers. Are the top set of numbers all Pro Forma or Actual? Does the expenses ($7316.54) include P&I? If it doesn’t include P&I then expenses are >50% and would require more in-depth analysis. If P&I is included, how much? Do the expenses come out to closer to 50% when you remove P&I?

By my calculations, using the 50% rule and a 5% Cap Rate the max value would be $1,200,000. If you use the Pro Forma 6.27% Cap Rate the value would be set at ~$956,938.