Hot Deals in Washington State for Multi-family

The following quick analysis’ are for multi-family properties currently available for sale in Washington State. Once a week we research all of the listing services and keep in constant contact with our fellow brokers in the industry for new hot deals. We define a hot deal as a property that will perform at a minimum level based on current underwriting standards for mortgages, thus maximizing your leverage. We also keep in contact with my primary multi-family broker, Carmen Estaban, at HomeStreet Capital to ensure that our knowledge of lending standards is up to date.

The following is the criteria used and minimums for considering a deal “HOT”. We also like to give a cushion with interest rates. They are investor specific and therefore analyzing with the lowest rate may not give a good general idea of a properties return for the majority of investors.

Lending Standards

Interest Rate: 4.25%

Amortization: 30 Years

Loan to Value: 75%

Debt Service Coverage Ratio:  1:1.25

Minimum Return Standards

Cash on Cash Return: 8%

Internal Rate of Return: 15%

Assumptions

A 5 year holding period is assumed when computing the Internal Rate of Return.  Forecasting is somewhat difficult, however Multi-family will be seeing an upswing in the next 18-24 months. Therefore an increase of 4% per year for overall property value is used as an average taking into account the anticipated rise in rents (NOI) and the corresponding reduction in cap rates as the future of multi-family solidifies.

An average increase of 3% for expenses is used which is standard.

Note: We are presenting these properties as your Buyer’s representative. If you wish a full consultation regarding a property to include acquisition, holding and disposition strategies to maximize your investment and your security, contact us. We are here to work for you.

124 Unit

LP: $7,750,000.00

Price Per Unit: $62,500

Cash In: $2,151,120

Cash on Cash: 8.16%

5 Year IRR: 17.29%

8 Unit

LP: $399,00.00

Price Per Unit: $49,875

Cash In: $110,970.00

Cash on Cash: 8.86%

5 Year IRR: 17.88%

52 Unit

LP: $3,500,000.00

Price Per Unit: $67,307

Cash In: $971,250.00

Cash on Cash: 9.20%

5 Year IRR: 18.24%

55 Unit

LP: $2,250,000.00

Price Per Unit: $40,909

Cash In: $624,870.00

Cash on Cash: 8.24%

5 Year IRR: 17.36%

10 Unit

LP: $550,000.00

Price Per Unit: $55,000

Cash In: $153,120

Cash on Cash: 8.27%

5 Year IRR: 17.37%

31 Unit

LP: $1,250,000.00

Price Per Unit: $40,322

Cash In: $347,340.00

Cash on Cash: 9.70%

5 Year IRR: 18.69%

96 Unit

LP: $8,640,000.00

Price Per Unit:$90,000

Cash In: $2,397,600

Cash on Cash: 9.72%

5 Year IRR: 18.71%

43 Unit

LP: $2,500,000.00

Price Per Unit: $58,139

Cash In: $693,750.00

Cash on Cash: 9.29%

5 Year IRR: 18.34%

8 Unit

LP: $409,000.00

Price Per Unit: $51,125

Cash In: $114,240

Cash on Cash: 9.61%

5 Year IRR: 18.60%

62 Unit

LP: $3,650,000.00

Price Per Unit: 90,000

Cash In: $1,013,370.00

Cash on Cash: 8.65%

5 Year IRR: 17.75%

16 Unit

LP: $600,000.00

Price Per Unit: $37,500

Cash In: $166,500.00

Cash on Cash: 9.26%

5 Year IRR: 18.30%

8 Unit

LP: $950,000.00

Price Per Unit: $118,750

Cash In: $262,980.00

Cash on Cash: 8.51%

5 Year IRR: 17.60%

All returns are computed “Before Tax”. For tax impact on return, please contact your tax advisor.

Brent A. Eaton, Commercial Real Estate Broker

KW Commercial, 22614 Bothell-Everett HWY, Bothell, WA 98021

direct 206.484.8071

main 425.482.6100

brent@kwcommercial.com

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Puget Sound Commercial Group Website