Deal Analysis: Multi-Family (Easton, PA)

[Robert Ferrar]

Hi All - Thanks in advance for any suggestions / insights / recommendations.

My partner and I have crunched the numbers and it looks like a good deal to us, would like the greater opinion of the BP community. I plan on visiting the site this Friday. This is our first commercial multi-unit deal, my partner has 7+ SFU's all house hacked in VA, but, this is our first entry into Lehigh Valley and multi-family space.

Deal Specifics: 

• Deal Type: Off-market, 9 unit plus coin operated laundry
• Asking Price: $800,000
• Target Acquisition Price: $760,000 (4.5% discount)
• Gross Rents: $92,000 ($7,667/mnth)
• Down Payment: 20%
• Financing Terms: 6.125% fixed 30 year commercial loan
• Operating Costs: $28,272 ($2,356/mnth)
• NOI: $63,728 ($5,310/mnth)
• FCF: $19,164 ($1,597/mnth)

Deal assumptions: 

• Vacancy: 8.33%
• PM Fee: 10%
• Maintenance: 5%
• Closing Costs: 4.1%

Key Metrics:

• Meets 1% rule
• FCF/Door: $177/month
• DSCR: 1.43
• Cap Rate: 8.43%
• Cash-on-Cash Return: 10.41%

Would love to hear anyone's thoughts, particularly those familiar with the Lehigh Valley area.

Thanks again!