All Forum Posts by: Mike A.

Quote from @Sean Haley:

Quote from @Mike A.:

Quote from @Sean Haley:

Quote from @Mike A.:

Hey guys, I am hoping someone can look at this deal analysis as I am going through a multiple offer situation.  It's a 3 unit multi-family, which is vacant. The owner cleaned up the entire place. New floors, appliances, cabinets, bathrooms, etc.  It's about 1m, and should bring in between 75k - 92k a year gross.  I've added the breakdown to thisLove post and attempted to use conservative numbers.  I find that it's vacant a plus btw.  I know I can fill the units within a month's time.

Are you assuming 100% percent occupancy? What is your interest rate? The return looks suspicious but I can send you a model with your deal in it if you send me all the underwriting assumptions.

Pre-approved at 6.5%.

Well, you have your answer right there. Based on the numbers you provided, your cost of capital is higher than your best case cash yield (cap rate). Below is a back of envelope calculation:

Gross Revenue (Best Case) 92K
Expense Margin @ 35%
NOI 59.8K

Purchase Price 1M
CR  6%

I agree with most of the comments, this doesn’t look like a good cash flow investment. Theres always more deals, keep hunting or negotiate a price discount.

 LOVE IT! ANOTHER pen and paper analysis, Coffee shop millionaires :) I NEVER use a calculator, no need, welI........I stopped readying after the 1 mill purchased and gross of about 80, NOTHING else matters. We all (those with experience) its about 40% in expenses, 

Keep crushing it. 

@Mike A. is it a lever handle and a deadbolt.  If so you can just replace the deadbolt and have make the lever a non-locking type but that looks like a screen door, don't you have a regular door behind it that locks?

No its not, 

 Its a terrible deal, 

I stopped reading after 1 mill and 85k gross, that's TERRIBLE, so about 3% net cap, not good

Quote from @Mike A.:

Hey guys, I am hoping someone can look at this deal analysis as I am going through a multiple offer situation.  It's a 3 unit multi-family, which is vacant. The owner cleaned up the entire place. New floors, appliances, cabinets, bathrooms, etc.  It's about 1m, and should bring in between 75k - 92k a year gross.  I've added the breakdown to this post and attempted to use conservative numbers.  I find that it's vacant a plus btw.  I know I can fill the units within a month's time.

Are you assuming 100% percent occupancy? What is your interest rate? The return looks suspicious but I can send you a model with your deal in it if you send me all the underwriting assumptions.

Hey @Mike A. - not to rain on anyone's parade here, but why are you being so optimistic with your modeling. I've noticed you didn't make any assumptions on vacancy or maintenance/repairs.

Sure the property might be turnkey, but its real estate and things happen & need ongoing maintenance. Just my $0.02, never assume 100% occupancy. 

Aloha,

You are on the right track, getting the attorney on it immediately. Do not relent. Do not accept ANY partial payment. If she contacts you, refer her to the Attorney, do not discuss anything regarding the rent. If she has maintenance issues (other than an actual emergency), tell her to submit them in writing per local LL/Tenant laws, then handle as necessary.

Most importantly, tighten up your screening process. This should never have happened so quickly.