Potential first MFH purchase
Hi everyone,
I'm considering making an offer on my first property. I'd love to get the advice and wisdom of the BP community on this deal. What have I missed??
The property is a 4-plex in a nice family/community oriented suburb. Each unit is a 3/2 with a garage. Schools are above average. Crime is non-existent (1 theft in the last 30 days, summer was the same). Building was built in 1990. The property is fully rented at present.
Here are the numbers:
Purchase Price: $230,000
Down payment, 25%: $57,500
Loan amount: $172,500.00
Loan payment (conventional, 5%, 30 yr): $926.02
Monthly rent: $3100.00
Monthly costs (see below): $1,456.50
Monthly NOI: $1,643.50
Monthly Cash flow: $717.48
Yearly CCR: 14.97%
The monthly costs include:
5% vacancy
10% Maintenance
10% Capex
9% Property Management
~1.5% Property taxes
~0.6% Insurance
I normally would put vacancy at 10%, however the tenants in the area seem to stick around for a while and it seems unrealistic to assume that every unit will turn over every year. 5% to me means that I am planning on 2 units turning over every year, and that it won't take longer than a month to fill those units again.
I am also expecting the 20% of Maintenance+Capex to cover turnover costs. It seems reasonable for a newer building like this, but I'm not sure?
These numbers are my best shot at "worst case within reason", and 15% CCR seems like a pretty good worst case.
What do you gals and guys think?
Omi