All Forum Posts by: Amit G.

Hello BP'ers, I am excited to share that I have my first multi family under contract. Its a run down mfu that has been vacant for past year or so.  It is in a great location but needs a total rehab.  Please review the numbers below and let me know what you think!

Acquisition: $95000
Rehab: $80000
ARV: $220000 - $250000 (comps provided by realtor)
Likely gross rents: $3000/month + $25 for coinop
Landlord fixed expenses: $750/month (sewer, common electricity, Insurance and lawn care/ snow removal)
Vacancy: 8% (not sure about how to calculate this!)
Repair: 5%
CapEx: 10%
PM: 10% (Is it reasonable or should negotiate for less?)

I am going with cap rate of 8% (not sure how to find it for the area).  

Electric is already separate and I am also getting water meters separated so renters can pay for that along with gas and trash. 

Does it look like I have all the expenses covered? and what do you think of this deal?  

I am going with the philosophy of increasing rents and reducing the expenses to provide a value add to the property.  Is there anything else I can look at towards that goal?

@Account Closed , 3 rooms are included in county records.  Basement room was put together by previous owner, we just refinished it. I need to find out if they pulled permits for that.  

So, is the burden on new owner if previous owner did not pull permits?

Thanks for contributing to this thread people. I'll update when I get refinance in a few months.

@Joshua Velte that make sense. Taxable square footage being different than sq. foot that can be advertised.  I'll keep my fingers crossed at the time of appraisal :)  This is a buy and hold and I have renters in place starting August 1st. I am going to get very good rent on this property compared to others in the area! It's just a mixed feeling because of some things that could have been avoided and done differently had I known of these facts earlier...

Thanks @Chris Mason that's very reassuring.  This property's numbers still make sense as it is a buy and hold and not a flip. Its just that I may not get my own money (or maybe get very little) out after refinance, the way I was expecting! 

Thanks @Heather Skowronsky it is very frustrating indeed!  So is the right approach to get appraisal done on any property you get under contract, for beginners like me?  I guess the answer is yes, until you are experienced enough to figure out on your own...

Some really great inputs @Andrew Johnson @Chris Mason @Sam Shueh and a great learning experience.  Unfortunately that also means that my numbers might not work the way I expected them to be.  

I am surprised my realtor did not convey any such issues while providing initial comps to calculate ARV!

Thanks @Chinmay J. it is actually a single family with country records showing 3 bedroom. Previous owner converted 3 bedrooms originally on first level to 2 bedroom and added one bedroom below grade! I can see it having a negative impact on the final appraisal if appraiser were to do comps based appraisal rather than income based appraisal. I am not sure if there is rhyme or rhythm on when they choose what. Unfortunately that can make or break the deal! 

Thanks @Colleen F.  From what you are saying, I guess it all depends on the appraiser.  I wish there was a more certain way to know.

Anyone?