21 unit deal analysis for NC property

[Nathaniel Loeffler]

I'm looking at my first potential multi-family deal and was hoping that some of you with more experience can tell me if this deal is worth exploring further:

21 Units in Charlotte, NC
Asking price - $649,000
NOI - $96,000
GRM - 5.1
Cap rate - 14.9
1 unit vacant
B property

I don't live in the area, so the deal has to be great in order for me to be willing to make an offer and get started with the due dilligance.

What do you think? Is this good enough to look further or should I keep looking?

[Mehran K.]

If those were actual numbers It would be great great! BUT I doubt they are. Never trust the numbers a salesman provides. You have to do all that on your own. You're going to need to dig for more info and verify what the real deal is. Some thoughts:

Scheduled NOI or Actual? Ask for past 3 years records to prove.
I'd ask for all the leases to compare and verify (but they might not do this til after an accepted offer)

What is the unit mix? Find out if this unit mix fits the target renter demographic in the area it is.

What are the market rents for that unit mix?

Any deferred maintenance? Status of main systems? Boiler, Roof, Plumbing, electrical etc? Ask for Maintenance/repair records for past 3 years.

Are the units separately metered? Who pays for what? Check the actual expenses for past 3 years.

Is there Management in place? What is the fee structure? Someone probably lives on site due to 21 units. Interview the Manager.

Why is the seller selling?
How much does the seller owe on their mortgage?
What does the future of Charlotte, NC look like?
How old is the building?
Local crime?