Mayfield 26 Underwriting & Deal Memo (Closing Date: 4/7/2025)
Deal Abstract
Solid 26 unit in Cleveland Heights, OH for sale with a parking lot. All apartments rented to long term tenants with modest opportunity to raise rents, though maybe more upside with nicer finishes.
Part 1. The Basics
| Question | Notes |
|---|---|
| 1. Property Name: | Mayfield 26 |
| 2. Property Full Address: | 2646 & 2660 Mayfield Rd, Cleveland Heights OH, 44106 |
| 3. Property Listing URL: | https://adamslynch.com/properties.html?propertyId=932473-sale |
| 4. Property Year Built: | |
| 5. Property Number of Units/Doors: | 26 |
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/1Yve_GA-_iLUz_kC_ufbvVKwoDQHD5o2iOWDfyCqi_mQ/edit?usp=sharing: UNDERWRITING COMMENT |
| 2. Asking Price: | $2025000: PRICE COMMENT |
| 3. FFEIC Median Income: | $102560: INCOME COMMENT |
| 4. Last Year's Annual Rent: | $277775: RENT COMMENT |
| 5. Last Year's Annual Expense: | $-116329: EXPENSE COMMENT |
| 6. Last Year's Net Operating Income (NOI): | $116329: NOI COMMENT |
| 7. 5 Year Internal Rate of Return (IRR): | 6.24: IRR COMMENT |
| 8. Yearly Cash on Cash (CoC) Rate of Return: | 3.5: COC COMMENT |
| 9. Debt Service Coverage Ratio (DSCR): | 2.09: DSCR COMMENT |
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 | TBD |
| 2. Am I the right buyer for this deal? | FIT SCORE | 1. Solid size, potential value add; 2. Incomes in the tract are solid, in Cleveland Heights 3. Seems to be the right opportunity to drive efficiency |
| 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:
1. Negotiate the price down lower to include capex; 2. Go higher on finishes to force appreciation; 3. Demographics on Cleveland Heights only improve
What the Risks Are
1. Asking price too high; 2. Limited upsides given they're all 1/1's mostly at market rent; 3. Operating expense very high at 40% without property management
Bonus Muhan's Notes
Wonder what the seller's motivation to sell is
Cool to recognize the two brokers, reminds me of my two other Cleveland Heights deals:
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.