[Calc Review] Help me analyze this deal

[Erin O'Connor Smith]

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[Erin O'Connor Smith]

First time trying this, most of the expenses are guesswork until I hear back from agent... your help appreciated!

[Dennis M.]

Looks pretty sweet to me . As long as your expenses are correct I don’t see an issue . 200 a door isn’t too shabby 

[Tchaka Owen]

@Erin O'Connor Smith - I too believe it looks good, though I will suggest a few tweaks:

1. My model would have Vacancy at 6% and CapEx and Repair at 5% each. It comes out the same as yours in the end, just me being anal.

2. $1000 for Water and $500 Garbage seem too high; $600-750 for Water $250-300 for Garbage seems more realistic. Or did you get those numbers from the seller? If not, the deal may be even better than it appears!

[Jaysen Medhurst]

@Erin O'Connor Smith, a few things about your analysis:

• I agree with @Tchaka Owen to bump your vacancy.
• I like a bit higher repairs and CapEx, though. 15% combined.
• What about gas? This appears to have only 1 central furnace and water heater. That's going to be a significant bill every month, especially during those Michigan winters.
• What's the $500 electric bill? Is the entire building on one meter? Ugg...not good, Erin, not good.
• Call the city and get actual costs for water/sewer over the last year.
• $50/month for landscaping and snow removal sounds low. Get some quotes.
• Your closing costs will be closer to $10k, I suspect. Appraisal and inspections of a 10-unit are a lot more than a SFH.
• You should budget at least $5k for initial repairs, probably more. There's always something!
• Your loan terms are unlikely. This will be a commercial loan. Rates will probably be ~5%, with a 20 or 25-year term. Call around to some lenders.

Two other important questions:

1. What's the local cap rate? Your pro forma is 10.3%. Make sure you know this so you can calculate for yourself what the property's value is.
2. Why does the listing say "cash offers only?" This is a huge red flag to me. It suggests that there's something about the property that will make financing difficult.  

[Megan T.]

I would be weary of the cash offers only part of the description. Does the property not qualify for traditional lending due to deferred maintenance or another issue?