Investment Opportunity - Yes or No?

[Caymanite]

Hello,

I would like to get some advice or comments on a potential multi-family acquisition with 2 partners.  I appreciate the comments and feedback.

Asking price: $2.09m, but I would like to run the numbers at $2.0m
Closing and other costs (10%): $200k...Caribbean island with no annual tax but up-front stamp duty
Expected monthly rent: $17k
Financing at 75% (excluding $200k costs) so $1.5m
Annual mortgage payment assuming 4% over 25 years: $95k
Positive annual cashflow at 75% mortgage assuming 50% rule: $9,600/year
Estimated expenses (for second calculation without 50% rule): $78k ($30k insurance, $25k maintenance, $17k vacancy estimate (1 month), $6k other expenses).  Plan to handle property management as a group and hire out maintenance.
Total return on invested capital seems to be around 318% over 25 years of life of mortgage.
The property is located on a Caribbean island on a canal with about 200ft of dock space with significant expatriates and a healthy financial services industry.

I have included a rough calculation spreadsheet with other basic information.

What would you (serious RE investor) pay for this?  What other information do you need to analyze the transaction?

Thanks for your input!

[Fishingmn]

I've never done multi family or anything anywhere near that large but my base calculations would be -

$2.2M investment
$17k/mo income
$8,500/mo expenses (50% rule)

Means the cap rate is 4.64% - I usually find deals about double that here in MN on single family

Then if I plug in your loan costs I get an annual Cash on Cash return of .44% - RUN!!

[KingCoin]

Are you sure you can get a full term mortgage at 4%?

[FrugalSpendthrift]

..... acquisition with 2 partners.

If you want to cash out after a few years, but the other partners don't.  What happens?

[honobob]

   What other information do you need to analyze the transaction?

Historic rent growth and appreciation and an educated guess for increase or decrease in the future.  A successful investor will be most interested in these figures.  Why buy a stagnant or decreasing business.  The local market will determine what a serious investor will pay (market value) for the stated income stream.  A MN single family cap rate has NO bearing on this property and it may be hard to get local actual cap rates.  At $2,000,000 it has a GRM of 9.8 .  Pretty mid range number but really only has meaning compared to ACTUAL sales of similar properties in the same area.