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Hi everyone,
I am a first-time multi-family investor, and would love to get some more eyes on this deal that I've zeroed in on with my realtor. I wasn't exactly planning on going for so many units on my first multi-family, but this looks like a pretty great deal to me. Wanted to make sure I am not missing something though...
It is a 6-plex, all units are 1-bed/1-bath. Rents are currently at $650/month, but my property manager says we can easily get $700/month. The units are in great shape - hardwood floors, tile in bathroom, windows look good. Opportunity to upgrade kitchen/bathroom fixtures down the road for some added value.
Landlord currently pays utilities, but there are separate electric meters, and (6) separate furnaces. Opportunity to add submeters to the furnaces to convert to tenant-paid utilities, and add some value to the property. There also is an accessible basement that is currently not used - so there is an opportunity to add tenant storage and coin-operated laundry. There is currently no laundry in the building.
The building is quite old (actually is in a historic district), and my team is recommending about $2,000 in exterior rehab on the decks and stairs due to deferred maintenance.
I have a quote from several lenders, and I am looking at putting 15% down for a 5-year ARM (2% max increase per year, 5% max total increase), 30-year amortization, 5.375% interest rate. My offer will be $350K, which is just slightly under asking. My strategy would be to do some work to add value, and either sell or refinance after 5-years once I put more equity into it.
This deal looks great to me, but I'm worried that it is too good to be true. What do you guys think? Thanks for your help!
