4 Family Calculation- Should hot areas get special treatment

[Nick Romano]

Hey Guys!  I Love these forums so figured I'd throw a unique calculation I'm working on for those of you who like the numbers:

The property is a 4 family in a hot suburb of Boston in the great state of Massachusetts.

By the numbers:

Purchase price: $650,000 (negotiating for less)

Down Payment: 20%: $130,000

Interest rate: 4.5%

Debt Service: $2,635

 Annual Rent:  $67,200  ($1400/unit expected to rise to $1600-$1700 in next 2 years)

 Water: $2200 (for all 4 units/year)

Taxes: $9,000 (seems high but that's what was in pro forma)

Insurance: $4,500

Other Annual Expenses:

Electric: $360 (common only)

Gas: $300 (common only)

Vacancy Expense: $2,016 (3%) (May be high estimate....)

Lawn: $360

Snow: $600

Pest: $600

Trash: $480

CapEx & Maintenance: $9,408 (14% of rent) (May be high estimate....)

I'll self manage to start until the rents get to around $1600/ea then consider property manager.

Cash flow is about $500/month (before raising the rents to market --$76,800 annually) 

New roof, driveway, electrical throughout, and one unit complete renovated (about $70,000 of upgrades) recently put into the house.  

So as you can see this property is just squeaking by on the 1% rule and 50% rule. But because its in a hot area does that give it special treatment? Also, does it make sense having CapEx at 14% of rent roll on a 4 family with high rents...maybe its too high and that will bring much better cash flow? I did some calculations of all CapEx divided by the life expectancy and price of repair which came out to a monthly total CapEx of about $600

That's all I have for now!  

Of course, you thoughts are so appreciated and can;t wait to hear what the BP community has to say!!!