Deal Abstract

https://www.loopnet.com/Listing/41-Yale-Ave-Providence-RI/35922499/

Turnkey 6-plex for sale in Providence, RI. I have two buildings that I believe are larger with more bedrooms than this property, so I'd love to understand where they're getting their numbers from.

Part 1. The Basics

Question Notes
1. Property Name: 41 Yale
2. Property Full Address: 41 Yale Ave, Providence RI, 02908
3. Property Listing URL: https://www.loopnet.com/Listing/41-Yale-Ave-Providence-RI/35922499/
4. Property Year Built: 1900
5. Property Number of Units/Doors: 6
Source

Part 2. Quantitative, Numbers, and Financials ("Sow Passion, Not easy mediocrity", or S2 P6 N18)

Criteria Amount/Comment
1. Link to Underwriting Google Sheet: https://docs.google.com/spreadsheets/d/1eIo5_waf4OplX0Z0lxwOfabVxxXFnZZdb18I1kVoUEU/edit?usp=sharing: UNDERWRITING COMMENT
2. Asking Price: $949000: PRICE COMMENT
3. FFEIC Median Income: $86043: INCOME COMMENT
4. Last Year's Annual Rent: $101400: RENT COMMENT
5. Last Year's Annual Expense: $-30605.56: EXPENSE COMMENT
6. Last Year's Net Operating Income (NOI): $70794.44: NOI COMMENT
7. 5 Year Internal Rate of Return (IRR): -8.32: IRR COMMENT
8. Yearly Cash on Cash (CoC) Rate of Return: 2: COC COMMENT
9. Debt Service Coverage Ratio (DSCR): 1.23: DSCR COMMENT
Source

Part 3. Qualitative, Pre-Mortem, and Investor Fit (Every Time Man Profits, Don't Dismiss Serendipity)

Question Score Notes
1. Why is the seller now? TIMING SCORE Uncertain
2. Am I the right buyer for this deal? FIT SCORE I own a property identical to it, except larger
3. What has to go right for this deal to work out? Right Rating
4. People?
5. Distribution?
6. Durability?
7. Secret?

What has to go right for the startup to return money on investment:

Very expensive

What the Risks Are

It's six 1BD1BA's, not much room to grow

Bonus Muhan's Notes

This is hysterical

Updates

This is where I’ll post updates about the company. This way all my notes from offering to post-offering updates will be on one page.

Review these deal memos every time the startup raises a new round

Test if original thesis still applies


So, did I invest?

Click here to find out.

Other thoughts, questions, comments, or concerns? Write me at mail@muhanzhang.com and let me know.