Signed up my first deal!
I completed a direct mailing to small MF owners in Fargo, ND. I sent 400 letters, received 25 calls, and found 5 "hot" leads.
I signed a purchase agreement on Friday to buy two 4-plexes for $330k. Not quite the 10% cap rate I was targeting but close.
They are all 2 bd, 1 bath units fully rented for $500/mo. Landlord pays heat which averages $100/building/month. $200ish from Nov-March.
Borrowing $235k @ 4.5% and 20-year amort. $100k downpayment.
The rents are approximately $50 below market so I'll be looking to adjust those as leases expire. If I can get the units to $550, the cash-on-cash will be 15%
Here are the initial numbers. Just wanted to share!
| Gross Rent | $ 48,000.00 | |
| Less: Vacancy | $ 2,400.00 | 5% |
| Less: Taxes | $ 4,800.00 | |
| Less: Ins | $ 2,600.00 | |
| Less: Utilities | $ 2,400.00 | |
| Less: Mgmt | $ 3,192.00 | 7% |
| NOI | $ 32,608.00 | |
| Cap Rate | 9.881% | |
| Less: P&I | $ 15,600.00 | |
| Less: Capex | $ 6,000.00 | |
| Net Cash Flow | $ 11,008.00 | |
| 11.0% |
I have a $60k offer in on a tri-plex that needs approx $10-15k of work. Even if we can settle on $70k, that deal should be 12% cap rate and 16-17% cash-on-cash.
Not home run numbers but they fit my plan. Best of luck to the rest of you!