Fourplex Purchase Questions and Analysis
I'm looking at purchasing a fourplex with the following numbers:
Asking: $225,000 (my research indicates he was asking $215,000 for the last two years)
Property Tax: $3560 ( non homestead)
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Built: 1977
Heating: water baseboard with natural gas boiler
Water: owner pays, single large water heater
Laundry: coin operated (owned)
Garages: 5 total
Separate electric meters
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Rent: $650 for 3, 2 bedroom 1 bath units 750sqft
Rent: $550 for 1, 1 bedroom 1 bath unit 600sqft
Total: $2500 per month
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My plan is to purchase using an FHA 3.5% down and owner occupy.
PITI: $1594.57
CAPEX: $200
Vacancy: $200
Maintenance: $100
Water/Sewer: $150
Garbage: $105
Total: $2349 per month + heat
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Yearly $30,000 income
Yearly $28,188 in costs + heat
Cash flow: $1812 per year
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Obviously this is not a deal I'm going to purchase, I'm looking to offer him an actual price that makes sense. When I owner occupy the taxes will go down temporarily but it'll need to make sense once I move on (I plan to occupy the $550 a month room).
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My question is this:
I'm new to the business, I have a duplex already but this will be my first four unit. I checked the owner on the property taxes, ran a quick background check on him myself (has six or seven evictions in the last 4 years). I spoke to him personally and viewed the single unit he has open. He basically says he wants out of the game.
He doesn't want the tenants to know he's selling and won't let me view the remaining units, even through my realtor. The fourplex is in a decent neighborhood B class.
How would the more seasoned professionals approach this situation? What kind of process would you guys use? I'm not buying something I don't get to see and it's difficult to come up with an offer when you don't know what you are buying.
Any help would be great, thank you.