Feedback on multi family in Montgomery

[J.S. B.]

I noticed this property back in October when I was exploring properties in my area and it kind of de-motivated me because it seemed like such a great deal I couldn't afford. 4 unit in Montgomery, AL listed for $166K, fully rented (according to the description) bringing in $2350/month so over that 1% rule for rent and would bring in over $1500 a month. Since then, the listing price has dropped to $129,900. And it's been listed for almost a year. Now it is closer to the 2% rule which does call for some skepticism. Good schools available for middle and elementary. Crime levels are not the best but they are comparable to places I have lived in with no problems.

Can anyone review this property and provide some insight on why this place might not have sold yet?

345 Arthur St
Montgomery, AL 36107

[Curtis Rouse Jr]

@J.S. B. Here is a quick financial analysis on this deal. Long story short, it looks like a good deal "IF" all the units are occupied and there isn't as much deferred maintenance as what I show. If at any point in time there are only 3 out of 4 units occupied, then this would be a negative yielding property in which you would have to pay each month (last chart). This is the problem with smaller deals like this because you don't have enough scale like apartments that I invest in. Me personally, I look for at minimum a 10% COC return, so anything below this is a bad deal and not worth my time. Let me know what questions you may have.

Assumptions

Downpayment: 20%

Closing Cost: 5%

Amortization: 20 yrs

Int Rate: 5.0%

Capex: 15% (older property assumption)

75% Occupied: