After watching the BiggerPockets Free Webinar: How to Find, Analyze, and Finance an Incredible Rental Property Deal and reading
The Ultimate Due Diligence Guide for Buy & Hold Properties
by Matt Faircloth
I thought it would be a great excise to find a home im interested in and see if i can actually analyze a deal and complete the sale if the numbers worked.
OK so i found a 4plex on realtor.com in Michigan all units undated since 2010, 2444SQ ft
List Price is 324000
Rents for 4 units is $2500
Insurance $ 2000
Gas $2160 yearly
Eletric $720 yearly
Sewer line insurce $88
Land License $300
When i asked for copies of other items the realtor told me the property has been miss mangaed the above was the only thing he could get on the property
Do you know the cap rate for the area?
$2500 Gross Rent
-$824 (taxes, insurance, and everything else listed above)
-$1,231 (P&I mortgage payment, assuming 25% down)
-$250 (property management)
= -$55 / month
since the total rent is $2500 month, I would dare to say this is a lower income area,,,in that type of area you should expect great cash flow, at that price you don't even get close to good numbers
Now if it was:
Dawn would own it... :-)
I would like to first say that's everyone for their input .
@Patrick Britton I honestly would like to know is there an easy formula for getting the cap rate ? In short sir no I don't know the cap rate but I'll do some research to get all required I for this exceriese
@Scott S. I'll be apply a va loan to this with 3 percent down which isn't required I'm sorry I should've included this before I'll live in one unit so I'll self manage but I do understand I'll need to account my time fore something
@Andy Collins this area is in demand but. These numbers on this property just are horrible. However I would like to make an offer , Iill understand if it doesn't get taken but I just want to take some type of action .
But I seriously want to make this into a deal any suggestions. For what my next move should be ?
I forgot to mention my realtor told me the rent for this property are below market , the owner are old and justo he rents for this area for a 1 bed rm are 700 - 1000 depending on conditions of the updates on a property
I would suggest analyzing a bunch of deals - anything you can get some general numbers on. The more of this you do the more obvious it will be to you when you come across one that is actually worth pursuing. I don't know your area, but on the face of it, it sounds like this one is pretty overpriced. The fact that you will be owner occupying does make a difference, but you want a property that will still be a good investment for you when you decide to move out. Also- you would be much better off with a place that has separate utilities (paid by the tenants) for the different units, especially with those lovely Michigan winters!
what city is this in? 1bd for $1000? That seems high in the Detroit area.
I just looked at a 4 unit 1 bed 1 bath in Wyandotte prime area and they were getting 550 a month rent per door. 1k seems like a lot
is this the royal oak 4 plex at Lincoln/ Wyandotte?
This property is in royal oak mi
What would make this deal work ,
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