All Forum Posts by: Jal Singh

All, thank you for your input.  After investigating further, it seems the expenses aren't the bigger concern here.  Although there are improvements to be made with the expenses, it's the income that kills this deal.  It doesn't bring in enough to justify the price point.  Passing on this one, but still looking for other opportunities.

Greetings BP!

I am working on a multifamily deal, but the numbers don't make sense to me. I would really appreciate a second (or third or fourth!!) pair of eyes. Please see the link to the T12 below. The NOI I am calculating doesn't seem right. I have a total net income at $304k (allowing for some vacancy here), but the expenses seem a bit excessive at $247k. The management fees look pretty high. This gives us a $57k NOI, am I off base here?

More info on property from the broker summary:
Units: 56
Price: $1,600,000 ($28,000/unit)
Cap rate: 7%

Dec 2015 T12

Any help with this is much appreciated, and thanks in advance for your time!!!

@Ryan Getz I'm analyzing for myself.

Hello BP,

I'm looking for a tool to use for analyzing multifamily deals. I have found a couple doing a Google search, but they cost about $100 or so. Does anyone have a spreadsheet they are willing to put out there?

Thanks!!

@Pete Tam Assuming you are putting a down payment of 20%, your cash-on-cash returns equal 2.75%. That's close to the same rate you'll get with a 10 year T-note or a 5 year CD. This doesn't even come close to my standards of getting an SFR. I would keep looking until you can get that cash-on-cash return closer to 10%, or at least a return that you are happy with. 2.75% isn't going to cut it.

These numbers also only give you 1% on the 2 percent rule. I hear mixed reviews about doing the 2% rule, but if you get 1%, you should look elsewhere.

I know it's occupied right now, but if you switch tenants, you need to consider costs of paint/carpet/etc... These calculations on returns will decrease the more you have to put into it.

You mentioned that you're a first time investor, so you are making the right move by asking these sorts of questions on BP. Keep at it and I'm sure something will work out for you, good luck!

@Carson M. Thanks, that's a great point.

After reading everyone's comments and also speaking with Property Management companies, I'm going to provide a fridge and a stove. Not sure if I'll go to ABC Warehouse or buy used, but seems like that is the route to go. I'm still on the fence about washer/dryer, but thank you all for providing input!!

@Scott K. You mentioned fridge and stove, but what is your opinion about washer & dryer?

@Scott K. It doesn't bother me that it's the armpit of Oakland County if it pulls in positive income ;)

Thanks everyone for the comments. I see it does matter what region you are working with and to follow suit. I'd definitely like to hear thoughts from more metro Detroit investors on this.

@Tom A. that's a great idea to make an opportunity out of this situation...

I did call a couple of property management companies and they said that a fridge and a stove are a must, washer & dryer optional. I also feel the same way as other people in this thread that mentioned that appliances are a pain, and it would be nice to avoid dealing with them if possible. I like the recommendation you guys gave to put in the lease that the landlord will not be responsible for any fixes/repairs/replacements.

@David Krulac I really like your theory!!