First time analyzing a deal

[Connor E. Giavasis]

Hello all,

       So this is the first property I'm attempting to analyze. I'm nervous about falling into analysis paralysis and missing out on a good opportunity. I would greatly appreciate some experienced opinions on the matter. It's a quadplex that is currently fully occupied. The owner is wanting to change areas they are investing in and is choosing to downsize their portfolio. The units are roughly 500 square feet  1 bed, 1 bath that are all tied on the utilities so the current owner covers the utilities as part of the lease agreement. Each unit rents for $350 a month with total cost of utilities coming from the units being between $200-$250 a month when fully occupied. The Building is located walking distance from a college campus so the current residents are students and the main customer base will be students. One unit has a gas water heater that has been recommended to be upgraded to an electric one for ease of utilities. The current owner also handles lawn care which I would be happy to take over on my own. I would not be moving into any of the units and will manage the properties myself. The owner is asking 145K for the unit but it has been listed for almost 6 months. What do you all think would be a good price to make this deal work? 

[Billy Davidson]

@Connor E. Giavasis if a property has been sitting 6 months in a market like this then something is wrong. I would say 120k-125k would be a great price to ask and see what happens. The way I did the math was:

• $350x4units = 1400x12months = 16800
• 300 (safe side of utilities) x 12 months = 3600
• 12 months tax and insurance = 2,300 estimate
• 16800 - 3600 - 2300 = 10,900 / 7 - 9% = 121k - 155k

Given its been sitting I would start at 120. You never know what issues will come and you never know what rehabs you want to make.

Best of luck. Keep me posted what you decide to do.