18 Unit Portfolio Purchase Analysis - Contract Being Written!

[Matthew Amabile]

Hi all!  I am looking at an 18 unit portfolio that an investor is looking to sell me.  This is comprised of three 4 units and one 6 unit.  These properties are all in a class C+ area by the beach and hotels in Atlantic City, NJ.  I know I am not getting a "fantastic deal" but I feel that closing on these properties will help propel my investing career forward.  The seller has thousands of units but is looking to consolidate from a bunch of small multi-unit properties to larger apartment buildings. The purchase price that the seller wants is 1.5M but I will have to come up with 300k to close on the property, of which I only have access to around 100k, so the seller has agreed to increase the price to 1.75M and throw the extra $ in for seller concession and closing costs and he will write me a note with no exact payoff timeline.

The numbers for my property are below:

Total rents $16,000 / month

Monthly Insurance: $1000

Mortgage: $8593 - I was thinking of a possible interest only mortgage which would be $6000 monthly.

Taxes: $25258

I threw in 5% for vacancies, 5% for repairs/capex and 10% for property management but would be curious to see how the BP fam would assess this property.  The majority of all utilities are paid by the tenants.

I currently only have one 4 unit at this time, but I think I can handle this with this investors guidance and a good property manager.  I also plan to convert some of these units to airbnb which, in the frequented area of Atlantic City, could bring in around $2k-$2500 monthly per unit.  

What do you think of this deal?