All Forum Posts by: Kurt Hines

@Owen Rosen  The insurance quote is from a local independent agency (Alpena Agency).  I prefer to always work with an independent agent.  I would be doing much more thorough insurance investigation before purchasing coverage.

@Salvatore Lentini  The lot isn't huge, but the lawn and snow figure would need to be firmed up.

As for Repairs/Maintenance & CAPEX, my plan was to do a through inspection of the property, and figure out what an appropriate CAPEX number and repairs and maintenance number would be. This property appears to be in good shape, hence 5% for R&M to start. What does everyone else use?

These are 3 duplexes, all next to each other.  Under one roof would be better, yes.

@John Casmon  they are 3 duplexes all together. I’ve already talked to a commercial lender at a local bank, and he gave no indication that there would be a problem getting a commercial loan on them. Of course I might be better off with residential loans from a portfolio lender. 

@Sam Shueh for Managment I just put in 10%. I’m going to talk to the local property management company to get a firm figure. 

I appreciate the thought about the RR tracks. It’s a concern of mine. 

Cap rates here are 8-9%. I like the idea of getting something local that I can buy, get a good chunk of forever appreciation, which I can tap into for the next deal. Local helps me really learn, and perhaps go farther afield next time.   Local to me means not much appreciation. But if I can lock in good cash flow, I’m okay with that for my first MF deal. 

@Mario Brown I have trash and landscaping/snow in there (though that is the weakest of my estimates.) I don’t have pest control, good catch

@Ken V.

The seller is selling them as multifamily, but pricing them as if she is selling them retail.  Probably why they have been on the market for so long. But regardless, it has been a very useful exercise in running my numbers. I’d prefer Togo a bit larger anyway, something with units in the teens, and I can use these learnings towards that. 

Regardless, I’m going to keep pursuing this throughout the process, and even put an offer in, if I can do it where the numbers make sense. If for the learning, if nothing else. 

 They seem to be in good condition overall, and it appears they've been somewhat updated, with 2 of the buildings having new roofs put on in the last few years. I put an estimate of 15k of rehab in to spruce them up, but I don't know for sure until I see the properties.

I think they might be, based on the tax records. They are all adjacent to each other in a kind of triangle, on a corner.

Their are not a lot of duplexes sold in the area, with prices all over the place, but I would put the ARV around 55-65k for the building with the two 1 bedrooms on the low end, and the two 2-bedrooms on the high end. They are directly next to the railroad tracks, which is going to lower the value.

We don't have much appreciation in this area, and I am primarily interested in cash flow.  I like the idea of buying a smaller local multifamily as a cash flow play, and learning.  This just happens to be on the market now, along with a 7plex with worse numbers (owners pays all utilities), if this doesn't work, I can look for off market deals.

Thanks!

Hi @John Leavelle

The 100k is theoretical. I based that on what the numbers show me the value is as a multifamily purchase. 

As I understand it, the formula is NOI/Cap rate. So ($2525-$1763*12=$9,144) / .09= $101,600

I assumed I had to be wrong, because with the value that low, listing it as a multifamily purchase doesn’t make sense, vs just selling them off individually. 

If you’re saying my cost numbers all make sense, then this as I suspected, is a pretty bad deal. 

Hi All. I'm looking at a couple multifamily properties in Northern Michigan (local to me). They don't seem like good buys, but I'm concerned that I may just have my expense numbers wrong. Below is one of them. Am I missing anything, or including something I shouldn't? Or including things in NOI that I shouldn't? I have one rental, but this would be my first multifamily

I'm doing a lot of numbers on these as practice, and plan on touring it next week. Even if nothing comes of it, it is a good learning experience!

6 total units (3 duplexes, Four 2-bedrooms and Two 1-bedrooms)

Asking Price 196k (Has been on the market for 14 months. I think they got the price by adding the potential retail price of each duplex, not calculating NOI against CAP Rates for the area (8-9%))

Current Gross Rents: $2,525, I think this could be stabilized to about $3,100.

Thanks!