I've been researching multi-family for the past 7-8 months and I'm researching deals on a daily basis. I've found two that I'm interested in and I've done a bit of research and was wondering what my next steps would be. I'd like to take action in 2018 and I'm looking for some guidance.
The current rents are just about right and slightly below the average. Property crime is below average. The units have been renovated recently with renovations like flooring and appliances. Tenants are also separately metered. As far as vacancy, it's 100% occupied... I know that this can't be quite accurate, but they have a large waiting list and seem to get people in very quickly if a tenant moves on. Also, these are self-managed and I'd need to partner with a property management group.
New to the forum as well, so please coach me on best practices when sharing financial analyses. Also, I'm very much lacking in my financing knowledge and I don't have much capital myself. I know that this changes everything, but I'm looking for guidance and decided to post for the first time to try and move in the right direction.
Thank you in advance for any advice or private messages about how I can take action in 2018. Thank you all and I wish you massive success this year.
-Mike
Property 1: $650,000 | 10 Units | 8.2% CAP | 1Bed, 1Bath
| Gross Revenue Q3 2017 | Monthly | Annual |
| Unit 1 | $ 615 |
| Unit 2 | $ 630 |
| Unit 3 | $ 615 |
| Unit 4 | $ 745 | *New Tenant 08/10/2017 |
| Unit 5 | $ 615 |
| Unit 6 | $ 635 |
| Unit 7 | $ 665 | *New Tenant 08/10/2017 |
| Unit 8 | $ 570 | *Long Term Tenant |
| Unit 9 | $ 600 |
| Unit 10 | $ 635 |
| Annual | $ 6,325.00 |
| Other Income |
| Late Fees | $ 58.33 | $ 700.00 |
| Laundry Revenue | $ 150 |
| Total | $ 6,533.33 | $ 78,400.00 |
| Vacancy | 0 |
| Expenses: |
| Cleaning and Maintenance | $ 150 | $ 1,800 |
| Insurance | $ 442 | $ 5,305 |
| Legal | $ 41.67 | $ 500 |
| Repairs | $ 278 | $ 3,338 |
| Taxes | $ 606 | $ 7,276 |
| Utilities | $ 632 | $ 7,582 |
| Total Exp | $ 2,150.12 | $ 25,801 |
| Income | $ 4,383.22 | $ 52,598.58 |
| *Current Offering Price | $681,812 | 7.71% |
|
Units: 4,6,7,10 are on Current Leases |
All other units on Month-to-Month from previous leases |
Single Meter for Water/Gas, can be billed back to Tenant monthly |
| Electricity in Tenants Name |
Property 2: 23 Units | $1,652,000 | 7.24% CAP
| Unit Mix: | Proforma: | Rate/Month | SF/Unit |
| 1 Bedrooms | 12 | $ 650.00 | $ 7,800.00 | 800 |
| 2 Bedrooms | 11 | $ 800.00 | $ 8,800.00 | 1000 |
| $ 16,600.00 |
| Actual Gross Revenue Q4 2017: | Monthly | Annual |
| Unit 1 | $ 750 |
| Unit 2 | $ 550 |
| Unit 3 | $ 550 |
| Unit 4 | $ 475 |
| Unit 5 | $ 505 |
| Unit 6 | $ 605 |
| Unit 7 | $ 585 |
| Unit 8 | $ 795 |
| Unit 9 | $ 595 |
| Unit 10 | $ 550 |
| Unit 11 | $ 600 |
| Unit 12 | $ 525 |
| Unit 13 | $ 570 |
| Unit 14 | $ 625 |
| Unit 15 | $ 570 |
| Unit 16 | $ 630 |
| Unit 17 | $ 555 |
| Unit 18 | $ 500 |
| Unit 19 | $ 525 |
| Unit 20 | $ 490 |
| Unit 21 | $ 600 |
| Unit 22 | $ 650 |
| Unit 23 | $ 675 |
| Monthly Total | $ 13,475 |
| Other Income |
| Late Fees | $ 50.00 | $ 600.00 | $ 600.00 |
| Laundry Revenue | $ 245 | $ 2,940 | $ 2,940.00 |
| 10 Garages (Included in Rents) | $ - | $ - | $ 4,200.00 |
| Total | $ 13,770.00 | $ 165,240.00 | $ 206,940.00 |
| Vacancy: (100% Occupancy***) | $ 688.50 | $ 8,262.00 | $ 10,347 |
| Total: | $ 13,081.50 | $ 156,978.00 | $ 196,593.00 |
| *Assumed 5% |
| Property Management: (Self***) | $ 915.71 | $ 10,988.46 | $ 14,485.80 |
| Total: | $ 12,165.80 | $ 145,989.54 | $ 182,107.20 |
| *Assumed 7% |
| Expenses: |
| Cleaning and Maintenance | $ 291.67 | $ 3,500 |
| Full Coverage Insurance | $ 710.42 | $ 8,525 |
| Legal | $ 50 | $ 600 |
| Repairs | $ 279 | $ 3,350 |
| Taxes | $ 1,392 | $ 16,707 |
| Utilities | $ 1,082 | $ 12,988 |
| Total Expenses | $ 3,805.84 | $ 45,670 |
| Analysis NOI: | $ 8,359.96 | $ 100,319.46 | $ 136,437.12 |
| Asking Price/ Cap Rate | $1,652,000 | 6.1% | 8.3% |
| Current NOI/CAP-Actual Operating: | $ 9,964.16 | $ 119,569.92 | 7.24% |
| Owner Improvements & Costs: |
| All New Windows | $ 40,000 |
| New Hail Resistant Roof & Gutters | $ 40,000 |
| New Garage Doors | $ 10,000 |
| New Carpet in Common Areas | $ 8,000 |
| New Circulating Pump/Hot Water | $ 2,000 |
| Unit Upgrades/Appliances | $ 20,000 |
| $ 120,000 |
| Kitchen & Bathroom Reno: |
Unit Cost $3,000; Resulted in $150 - $200/Unit Rent Increase |
Owner creating a waiting list for unit reno's from tenant demand |
| Unit Rental Rate Inflations: |
Rent Increase Notices given every year, Tenants aware & compliant |
