Practicing on 8 unit apartment complex in Hunington Beach!

[Peter Bui]

Hey all,

I am trying to get into commercial real estate and wanted to practice some analysis before I start syndications and offering on properties. With that being said, here is my analysis for a deal in Hunington Beach. I would very much appreciate any feedback and I will take them constructively!

Address: 8177 Garfield Ave Hunington Beach, CA 92646

IF i were to buy this for 2,300,000

Cap rate: 4.56

Bed/ Bath: 1/1 x 8 Units

Rent: 2000 x 8 

Expenses: 

Property Management Fees - 1000

Repairs/ Maintenance - 319.14

Real Estate Taxes - 2875

Rental Property Insurance - 766.67

Vacancy Costs - 1333.33

Capital Expenditures - 960

Total monthly expenses: 7254.44

Financing: 

Down Payment: 20% - 460000

Loan Amount: 1,840000 @ 5% interest rate

Closing costs: 69,000

PI/Mortgage: 9877.52

Cash invested: 529000

Total Monthly Cashflow: -1311 = 16,000-7254-9877.52

ROI: -2.57%

The point of this excersise is for me to recognize bad deals. And if i can recognize bad deals, I can recognize that something isn't a bad deal and I can start negoitating from there. Anything will help! (rent too high/low, not enough capex set a side, ROI doesn't make sense, the whole deal doesn't make sense, taxes, insurance, interest rates incorrect, etc....)

Thanks in advance!

Peter