Help with 3 unit building deal
I am a new investor working on my first deal. It is for a 3 unit building in Mass. I am mostly concerned with your opinion on the overall deal itself and also using the 50% rule on a 3 unit.
The deal...
Purchase price is 80k. Owner financing 20% no interest w/ 3 year balloon. Hard Money for the 80%. (not sure exact terms yet)
all 3 units occupied w/ long term tenants. 2 units are section 8 and one not. the section 8's are 100 per month lower than the area max rent for 3 bedroom apt. (all units are 3 bedroom)
roof is 15 years old
tenants pay untilities
heat is electric
3 new hot water heaters
no other big ticket items to potentially fix just roof and hot water heaters.
overall condition is good. section 8 approved all 3 apts with no issues
income from rent is 26,400
taxes are 2100
ins. 1400
town water/sewer 1600
property managed by me
assume 5% vacancy 1320
assume 5% maintenance 1320
income 26400
expenses 7740
debt service to be determined
as you can see expenses do not come close to the 50% rule. i cant imagine that my hard money terms would cut too deep into the remaining income.
What are your thoughts on what you see here? What am I missing? He has another 3 unit right next door that I can get for the same deal. He is tired of the landlord game he says and he wants out.
Thanks for your input!