BiggerPockets

Ok, I'm not actually going to buy but, I've been looking at this site excessively, and decide to give my valuation skills a go. After a few days of going over properties via, realtor sites, craiglist, etc studying the market I will invest in I ran across this.

4 unit building(really 5 units but 5th is unfinished)
Sales price $89,900
Apprasial Value 109k

All units have been rehabbed fully. New energy effecient furnaces, rehabbed kitchens with hardwood floors, new bathrooms.

100% occupancy.

Gross Rents $2250
PITI 69k @ 8% over 30 years is $1006
NOI is $1244
Expenses $1125
Positive Cash Flow of $119

Claims contractor says 6k to get the 5 unit going and could rent it out at $500

Would this be a winner or loser? This would be a property I would go and check out as a newbie, if I were buying.

I'd like to run this deal's scenario too. I'm going to look at properties similar to this.

Purchase price $60K (3 bedroom/1ba)
Mortgage of $48K (7.125%, 30yr)
Taxes $2015
Insurance $600 per year
Maint/Expenses approx. $1500 per year (could be less, property is in good shape)

Rent would be at least $900 a month (property is currently vacant, tenant could potentially be signed to a lease prior to closing)

NOI -
Gross rents $900 - Operating expenses $343 = $557

Cash Flow -
$557 - $343 (mortgage) = $214

Thanks,
Aly

Mike,

How are you coming up with the $450 NOI? Not just the types of expenses, but the allocation of $$?

For the mortgage debt, you have:
Debt: ($60K, 30 yr, 7.125%): $404

I would be putting down 20%, so the mortgage amount would be $48K. I get $323 monthly PI for that. If I add the taxes, I get $490. With insurance, it's $540.

Also, how did you estimate the monthly operating expenses for hustlershope23?

Aly,

Throughout the United States, operating expenses run 45% to 50% of the gross rents. I don't try to break down the individual expenses for a given property in a future year because that is impossible. How many evictions will a given property have this year? Will a tenant in a given unit sue you this year? How many months vacancy will you have in a given unit this year? All impossible to answer.

I understood that you will be putting down 20%, but is that 20% free? Isn't there a cost to putting 20% down?

Taxes and insurance are part of the operating expenses.

Good Luck,

Mike

fortunately this is a good deal especially if the area or surrounding is good too..

Attorney review? What is that for and how much is that costing you?

Your first deal sounds good, your second deal I wouldn't touch. 60K for a SFR rental property @ hopefully $900 per month sounds pretty risky.