Need Help Analyzing a Deal in Rockville, CT
Hi BP team - I'm reaching out for some advice/guidance. This is my FIRST deal. Here's the situation:
5-unit off-market in Rockville CT for $260000
-units 1-4 are 1BR and currently rent for $600/month - market rent is ~$900/month (2units are currently vacant and the other 2 are month-to-month)
-unit 5 is a 2BR and rents for $1050/month (currently rented until March 2022)
-roof, windows, and furnace were all replaced within last 4 years (according to owner - but haven't yet verified by looking at paperwork, etc.)
Owner is interested in seller-financing, but wants to know how much I'm willing to put down to show I'm serious.
Here's what I'm thinking:
-I take ownership of the property by putting 5-10% down. This will leave me with a monthly mortgage payment to the current owner of ~$1500 (principal, interest, taxes, insurance).
-Fully rented, the property will pull in ~$3400 now but ~$4800 after raising rents
After accounting for property management, capex, vacancy rates, etc., I'll still be cash-flowing ~$1000 now and ~$2000 after raising rents. I'm thinking I force appreciation by renovating each unit as I turn them over in the next 1-3 years and then refinance to a traditional lender in order to pay out the current seller before the 5 year balloon payment comes due.
Does this seem like a good plan? Any feedback or advice? Am I missing anything?