4-Family purchase-Objective perspective wanted
Hello BP!
I’m seeking some outside perspectives on a deal I’m analyzing.
I’m looking at this 4 family (all 1bd,1ba units) in a solid “B” area near me to house hack. The other 3 units are rented with long term tenants. I currently rent, and my lease is about to be up so it’s kind of good timing.
Numbers while house hacking:
Rental income – 1375 (provided by the selling agent)
Total expenses—1415 (PITI , capex, vacancy, repairs, self-managing)*
Cash Flow- (40)
*(capex, vacancy and repair percentages based off fully rented property of 1825 rental income)
My current residence rent is 975.
To me, it would be a HUGE savings to move into the 4 family going from 975/month housing expenses to 40/month. This saving could be used for getting ready for the next deal, paying down student loans or something else financially intelligent and proactive.
If I were to move out in a few years, the unit would rent for about 450. That takes rental income up to 1825.
Numbers fully rented:
Rental income – 1825
Total expenses—1417 (PITI , capex, vacancy, repairs, self-managing)
Cash Flow- 408
COC ROI-61%
The issue is that I am now teetering on the threshold of hiring a property manager due to the number of doors that would bring me to and my knowing that having to manage that many properties while having a full-time career could be un-wise of me. I have been quoted PM fees from 70-90/ unit. This would destroy the cash flow of the 4 family taking it from 408 down to 128 with 70/unit PM fees. The COC ROI being 61% means next to nothing to me in this instance as it drops to 19% COC with PM fees and cash flow of 128…not that great for a 4 family fully rented I thought.
In the short term, it would be great to put 935 back into my pocket each month, but I know not to be that myopic; long term is harder to justify. Any comments/ suggestions would greatly be appreciated.
Thanks to all in advance.