[Calc Review] Help me analyze this deal

[Michael Baradell]

Hey guys,

I came across this off market 18 unity apartment complex. Seller has owned for over 25 years and has no lien on the property. The numbers are his actuals from last year. 

This one intrigues me for a few reasons:

1. He is charging $800 in rent where market is easily $1000 (neighboring similar units rent for $1000)

2. He is also paying for water for all 18 units

3. There are 16 separate garages attached to the property that he is not utilizing. 

4. He is willing to seller finance for 5 years at 5% interest 30 year am. with 10% down

This will be my first multi family property, so any insight on what I may be missing or should consider would be greatly appreciated!

View report

*This link comes directly from our calculators, based on information input by the member who posted.

[Jonathan Bombaci]

Overall the numbers seem pretty solid but I have a couple of questions/suggestions. 

Will you self manage or hire a  property manager? Either way bring a local property manager out and see what they think of the property and what’d they charge you to manage it. 5% seems low but I don’t know your market. Plus by walking the property They may notice something about the property that you overlooked. Knowing about it will save you trouble and money later on. 

The insurance seems crazy, is that real? $2200 a month that’s $26,000 a year. If thats a real number then that property has had insurance claims or there is something off with that. Call a insurance agent and see what they can find out. Also have them to give you a quote.

The seller financing is a great deal but what are you going to do in 5 years? Bring your numbers into a bank and see IF they would give you a mortgage on this. That way you can feel confident knowing you can get the money you need when the time comes. See what the banks terms would be (down payment/rate) so you can plan accordingly. 

Looks pretty interesting I’m very excited for you! let me know if you have any questions or want someone who doesn’t plan to ever invest in LA (so won’t steal your deal) to look over the numbers with you. 

Good luck!