Need Your Input: Deal or No Deal?

[Shane Crockett]

6 unit MF unit in desirable area

$1.5M asking price

4% Cap

35% Opex

Estimating 10-15% rehab costs

Estimating rent increase 30-45% after rehab

2% YoY rent increase

Low vacancy

4.5-5% CoCR

All cash syndication purchase

Rents should increase more than 2% once we’re fully back from pandemic impacts. Feels like a good deal but what am I missing?

[Jonathan Greene]

You'd have to describe the desirable area for me to sign off on a 4% cap. In many parts of CA, these low cap deals work for investors, but they aren't what I am looking for. The size of the units matter in terms of the neighborhood makeup, as well as several other things that don't fit in a calculation.