All Forum Posts by: David H.

Thanks Tevis,

I assume you meant maad good instead of maad ....well mad bad. If I understand the rule, the 50% rule would actually end up with a higher NOI than I am estimating. $6,000 per month in rent would be $3,000 per month in NOI ($36,000). I am estimating $33,000 annually.

For reserves, I am using $250 per unit per year, or about $3,250 per year. Should I be using a larger number to be conservative?

This property is in Michigan, and I think most people are not big fans of Michigan real estate. I view this as a benefit, personally. Less competition.

As for as debt service, I usually try to keep the analyses separate. I think a deal should be good whether you are paying cash or financing.

Actually, I am estimating $300 per unit per year. So a total of $3,900 for the year.

Also, the reserve of $250 per unit per year is another $3,250 as a deduction from NOI.

The owners are in their early 70s and have owned the property for 30 years. Kids are not interested. Time to retire.

Hello everyone. First time poster, but I have spent some quite a bit of time in the forums since finding this site last fall.

I have a 13 unit (8,000 sq. ft.) building under contract for $279,000 and am in the due diligence period. Wanted to get some feedback on the deal and numbers. I have other investment properties (4 units or less), but this is the first larger multi-family. Single story, brick building with a pitched roof built in the late 60s. Stable B to B- area.

Unit mix - 11 one bedrooms ($460 per month), 2 two bedrooms ($475 per month). Total gross rent of about $6,000 per month. Currently fully occupied. I think there is some upside in the rents (especially 2 bedroom units), but I am not counting that in my numbers.

Central laundry room with two sets of owned (not leased) coin op washers and dryers - estimating about $80 per month.

Tenants pay their own electricity (electric radiant ceiling heat and in-unit electric hot water tanks). Owner pays water, sewer, and common area electric (lights, washer, dryer, and electric water heater for laundry).

Annual Property taxes $8,600
Annual insurance $3,500
Management fee 7%
Annual Advertising $1,000
Water $240 per month ($2,880 per year)
Owner electricity $80 per month ($960 per year)
Lawn/Snow, etc. $1,550 per year
Legal $500 (rough estimate - many tenants are long-term and there have been no evictions in the past few years)
Maintenance $300 per unit per year (this is much higher than the current owner's financials)
Dumpster and trash removal $150 per month ($1,800 per year)
Reserves $250 per unit per year

With a 10% vacancy rate assumption, I come up with NOI of about $33,000, which would be just shy of a 12% cap rate.

Am I missing anything in these numbers? I would appreciate the feedback.