I will get straight to it. There is a 4 plex for sale in Corpus Christi, TX. Each unit is 2 beds 1 bath. Each unit rents for $1075 ($4300 total gross). Currently 3 of the 4 units are occupied. The vacant unit that I did see was in C+ condition. There is a four space car port on the back of the property. Asking price $215,000. With the numbers as they are, when the property is fully occupied it follows the "2% rule". Based on the "50% rule" it would cash flow $450/mo. I am assuming a $200,000 purchase price which is a $1700/mo mortgage payment which includes (PITI). The only number I am not sure about is the insurance. I assumed a $2,000 annual cost.
What am I missing? I will get inspections done and I know some work needs to be done, since there was some water damage in the unit I saw. The roof and all windows are three years old.
Any advice is greatly appreciated, this seems like a really good deal. Thanks!
That's not crazy for CC; assuming the rest of your due diligence turns up empty of other issues, the low asking price is probably just market rate for B- class properties. The tenant pool at the low/middle end in Corpus can be very management-intensive. Not sure you can count on a low vacancy rate either.
$2000 annual is probably too low for insurance; windstorm insurance is required everywhere in CC. Also varies based on whether you're in a Special Flood Hazard Area (SFH Zone). So check which zone the property is in so you can get an accurate insurance estimate. I'm paying about $1/sqft for insurance on my Single family homes in CC, and they're not in a high-risk SFHA.
Thanks! I’ll rerun some numbers.
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