All Forum Posts by: Shawn Singh

@Greg Scully  

Thank you for the detailed response.  Some answers to your assumptions, and questions back to you:

1. Interest Rate - 6.45% for a P&I loan amortized over 30 years, 75% LTV, Rehab cost out of pocket

2. Our expectation is that there are leases that we will have to honor, so as you mentioned, we are expecting the new rents to be in place in year 2.  That being said, it is our understanding that because of the extended rehab time, we cannot run with a LTC scenario, rolling rehab costs into the loan, because we would have a limited amount of time to complete the rehab, and we are constrained by the existing leases.  Is that assumption incorrect?

3. We assumed a 7% vacancy rate, and kept our expenses at the 44% ratio in line with what was shared. It did seem a bit low to me as well. When you run your numbers, do you leverage the existing expense numbers (and prove them out during due diligence?), or go with 50% to run the numbers? Do you add Maintenance / CapEx on top?

Thanks again

Hello everyone,

I am an investor and current have a portfolio of 3 residential properties (1-4 unit) that I have purchased leveraging the BRRRR strategy. They have been successful thus far, however I have been looking to accelerate my growth by focusing my efforts on larger multi family properties.

My agent brought the following property to me as a value add deal - I've been trying to run the numbers, however I'm not sure if there is something I am either missing, or maybe I am correct and this deal just doesn't work.

8 units

Asking: $850k

Gross Income: $97k

NOI: $52k

Cap Rate: ~6%

I believe that after updating kitchens / bath / flooring (assuming $12-14k per unit, at total of $100k), we can raise rents for a projected rent roll of $113k, resulting in an NOI of $69k (assuming expenses don't increase).

Now, with those numbers, I thought this should have been a good deal, however after running numbers at 25% down (for both purchase and post rehab refinance at a 6 cap), I'm resulting in cash flow numbers that are below $500.

Can someone review the above info and tell me if there's something that I'm missing when it comes to running numbers?  It's my first time venturing into the commercial multi-family space (5+ unit), so genuinely not sure if I'm even running the numbers correctly. 

Thanks for the help in advance!