Help with 5-unit deal analysis

[Sean H.]

Hello BP Community,

I have analyzed this deal myself (using calculator!!) and it does not look like the right deal for me and my investing objectives.However, this is the first multi-unit I have seriously looked at and want to make sure I am making some of the correct assumptions; which are below. Maybe I am being too conservative in some of my estimates or even forgetting something big.If anyone has any suggestions or things I should look at differently, I appreciate the input!

The property is a 5 unit building with the following information:

• Rental income is $4,000 per month or $48,000 per year total
• Taxes are $375 per month or $4,500 per year (this is higher than current but factoring in that they will increase)
• Estimated insurance is $200 per month or $2,400 per year

Expenses:

• Vacancy 8%
• Management 10%

Other expenses

• Landlord pays water at $400 per month or $4,800 per year
  • Realize this could be a cost savings in the future, but want to analyze as is
• General maintenance (including minor repairs on property) including grass and pest control estimate at $300 per month or $3,600 per year
• Capital reserves for Cap ex (appliances, windows (52 windows on building), roof, siding, etc. which I based on building a capitalization table based on useful life of items and number of units) at $460 per month or $5,520 per year

Loan:

• All in after down payment the loan would be for $300,000
• Assuming 7% interest rate
• Amortized over 20 years
• Thus comes out to $2,325 per month or $27,900 per year

Summary

• Income Per Year:$48,000
• Property Exp. Per Year:(-$6,900)
• Expenses Per Year:(-$8,640)
• Other Exp. Per Year:(-$13,920)
• Debt Service Per Year:(-$27,900)
• Total per Year:(-$9,360)