Potential 4-plex house investment
Good afternoon BP!
So there's a 4 plex rental property in my town that has been on the market for about 6 months now and I wanted to ask you all some questions on whether or not I should go ahead and take this deal. The property is located near a college, so that's what really sparked my interest.
Anyway, the property is currently on the market for $52,500, and according to the city assessor, it's assessed value is $55.200.
I've been talking to the agent assigned to this home and I asked if the seller would be interested in a "Subject To" contract. The agent said the seller would entertain contracts. I asked about typical vacancy rates and supposedly it's almost always 100% occupied. Which I figured it wouldn't take long to fill, since it's literally 1 block away from a college.
The agent said the property looks good on outside, has new metal roof, but needs work on inside and that the seller is willing to do some repairs on.
Now, currently I am located in California until I EAS out of the Marine Corps, so I haven't personally seen the property, but my family is located just 10 minutes away from this property, and I could have my father go in and inspect it in my absence. (I will be returning shortly). I'd have my father look at big ticket items like water heaters, furnaces, etc and how new they are.
One of the concerns I have is, in 2008, this area was flooded (a lot of the city was flooded, causing millions of dollars worth of damages) and this property was one of the ones that was hit by it. I am not sure if insurance usually covers things like that...
According to the seller, the average monthly gas for the past 2 years is $201. The Average monthly electric for past year is $131. Current rent per unit is as follows:
Unit #1- $300
Unit #2- $400
Unit #3- $325
Unit #4- $450
So in total, total rent collected per month is: $1475.00. Subtract the total cost in gas / electric, that totals to $1143.00 a month profit. Now, if I'd assume the current owners mortgage, that'd subtract about $394.00 a month (which includes insurance, and mortgage combined).
So after all expenses are taken out, I could potentially see an average monthly cash-flow of $749.00 or about $9,000 a year.
Current tenants are on a month to month lease, so buyer can get new tenants if desired. Which leads me to my next question...If I were to assume ownership of this property, could I charge water and gas to the new tenants, if I put it in the new lease agreement? Would it be as simple as just putting it in the lease contract that tenants pay water and gas and electric? Just a hypothetical question, not saying I would, but I would consider it if I were to assume ownership of this property.
I think that's all I have for now, I would definitely appreciate feedback concerning this! Hope you all are having a wonderful BP day!
-Nathan