Navid A.
Exciting stuff!
I’d be sure to account for capital expenditures (age of HVAC, plumbing, kitchens, appliances, etc).
Could ask seller to provide list of other expenses like exterminator/ or pest problems, lawn care, etc.
Best advice I received is buy for cash flow, secure long-term debt and have adequate reserves.
I would determine cash flow you need and work backwards to get purchase price. The profit you have calculated seems high to me...tough to know for sure without seeing the age and condition of the property. Could ask for rent roll to ensure all numbers are accurate when calculating purchase price...trust, but verify.
Not sure about your market, but you could also consider population growth, average age, unemployment, vacancy rate, job opportunity, demand for 1 bedroom rental.
Could also inquire about screening process for existing tenants, you may not want to inherit multiple tenants who have not been screened appropriately.
May also consider exit strategy, hold forever vs. add value and sell in 5 years.
I put 20% down for my commercial purchase but you could get creative and use Heloc for down payment, but you would have to get a really good deal and could force appreciation reappraise, refinance, rinse and repeat.
Could do seller financing, but keeping it simple may be best approach.
Good Luck!
