Purchase Price Help - 12 Unit Multi-Fam

[Brian Hall]

Hello,

Looking for some help as I venture into a 12-unit multi-family (potentially).  This will be the first time moving beyond an individual condo investment.  Would love some guidance.  Property is listed at $675K.  My concern is on how to calculate property value due to vacancy concerns.  2 units are currently vacant, with 3 additional leases expiring by January 2021.  Following are the numbers. Cap rate @ 5.5% with these numbers. 

Mortgage (20%DP) - $2899 (30-yr @ 5%)

Taxes - $500/mo

Ins - $50/mo

Fixed Exp - $400/mo

• Water/Sewer - $250
• Garbage - $150

Variable Exp - $3194/mo 

• Vacancy - $1,161 (based on current 16%)
• Maintenance - $726 (10%)
• CapEx - $726 (10%)
• Mgmt - $580 (8%)

Any guidance on what I'm missing or what type of offer makes sense would be appreciated.

[Justin Elliott]

A few recommendations.

-Call a good property manager in Columbus (I assume) and tell them about your project and that you are looking to have them manage it.  Ask if they have anything same vintage same area and what they think rental comps are.

-Ask the broker or a property manager for a Costar report or other report that will show you sales comps just so you know what the market gets.

-call an insurance agent to get the insurance quote now.  They will happily do that for you.  make sure they are multifamily insurance specific or specialized in some way.

-find out the cap rate in that area. once you have NOI and cap rate you will have the valuation.