4 plex questions

[NA NA]

Considering buying a 4 plex for $595,000 at 6.5%. And 0 down. (VA lender) Total collected rent would be at about $67200. What is killing me is after factoring in property taxes of about $9000 for the year and 10% of the rents $6.720 for property management as well as insurance factored at another $2400. It puts me in a position of barely being able to cover expenses. Maybe $1800 in the positive over the year. (Not factoring any issues)

Is this a bad deal? Or is it one of those things that would potentially pay off in 5-10 years? The location is in a booming area of McAllen, Tx with almost nowhere else to build and rents have blown up the last few years. 

New to the game so really trying to find a deal that will put me in a position I don’t regret. Thank you in advance. Feel free to be honest with me you won’t hurt my feelings lol.

[Bill B.]

Since you'll be saving your own living expenses by living in one of the units as required by the VA (to the best of my knowledge.) pretend you are paying rent and it should make your numbers look much better.

Plus. Since you said you don't really need the cashflow because you are sitting on huge reserves do the math based on income instead of cashflow. (Loan paydown, tax savings, etc etc..). You might also want to do the math on a convention loan instead. (Not being a vet I'm not sure of the interest rate difference but know that the 3.5% down FHA is often worse than a conventional 5% down.). You might find that a small savings in interest rate makes the difference.

Ps. If you truly have cashflow to spare I would personally look at the 15 year. It will make your cashflow worse but should save you $3-$6k in interest per year. That’s real income instead your pocket, even if it’s not cash. I also assume you’re investing in an area with increasing rents so look at 3-5 years out with increased rents an it better cashflow well if rent isn’t stagnant. 

I like the idea of a newer 4plex but they just don’t exist in my market. Good luck.