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@Amaju E. Are you self insuring? I don't think a mortgage company will allow you not to have insurance.I don't think your capex numbers are high enough. Example if you have 4000 sf of carpet in your rentals. Me to replace it would be around $6 sf. As per IRS life span is 5 years. 4000 sf*$6=$24000/5 year life span/12 months in a year=$400 per month in carpet capex. Still have to budget for appliances and hot water heaters, 12 year life span, roof 25 year life span, hvac 20 year life span, minor kitchen and bath remodel 20 year life span, etc. 

Hi Amaju, what kind of property is this? It looks like a four-plex. Or is it several houses on one lot? I ask because there are some new rent control rules that may affect your returns. What part of Oakland is it in? $2100-2300 may be low depending on the neighborhood and other amenities. 

Also, you only have a $200/month difference in the rents from the small unit to the large one. What is the size and bed/bath configuration difference here?

I also agree with Tim on the insurance piece. YOu have to get insurance. There are two great insurers here in Oakland that I would lean on for anything in the multi-family world. I'm happy to pass their names along if you send me a DM. 

I think your expenses are close but I would consider adjusting them a touch. I think your vacancy factor can be closer to 5% and your cap-ex should be 10% given the fact that you are in a rent control city (and state) and won't be allowed to raise rents on existing tenants to market rate. By the way, are the units vacant? If so, that is HUGE! If not, that is worth at least a 5-10% discount. I'm happy to talk about the nuance of that if you like. Lastly, I think you can get property management for closer to 7% but if you want to be really conservative, 9-10% will for sure cover you. 

I invest out of state personally but am very active in this market as an agent and would be happy to help you talk through this in any way that I can, even as a sounding board. Best of luck and I hope to hear from you!

Best,

Hans

Originally posted by @Tim Herman :

@Amaju Etchie Are you self insuring? I don't think a mortgage company will allow you not to have insurance.I don't think your capex numbers are high enough. Example if you have 4000 sf of carpet in your rentals. Me to replace it would be around $6 sf. As per IRS life span is 5 years. 4000 sf*$6=$24000/5 year life span/12 months in a year=$400 per month in carpet capex. Still have to budget for appliances and hot water heaters, 12 year life span, roof 25 year life span, hvac 20 year life span, minor kitchen and bath remodel 20 year life span, etc. 

Thank you, Tim. No, I am not self insuring.

 I will take that into consideration.

Originally posted by @Hans Christopher Struzyna :

Hi Amaju, what kind of property is this? It looks like a four-plex. Or is it several houses on one lot? I ask because there are some new rent control rules that may affect your returns. What part of Oakland is it in? $2100-2300 may be low depending on the neighborhood and other amenities. 

Also, you only have a $200/month difference in the rents from the small unit to the large one. What is the size and bed/bath configuration difference here?

I also agree with Tim on the insurance piece. YOu have to get insurance. There are two great insurers here in Oakland that I would lean on for anything in the multi-family world. I'm happy to pass their names along if you send me a DM. 

I think your expenses are close but I would consider adjusting them a touch. I think your vacancy factor can be closer to 5% and your cap-ex should be 10% given the fact that you are in a rent control city (and state) and won't be allowed to raise rents on existing tenants to market rate. By the way, are the units vacant? If so, that is HUGE! If not, that is worth at least a 5-10% discount. I'm happy to talk about the nuance of that if you like. Lastly, I think you can get property management for closer to 7% but if you want to be really conservative, 9-10% will for sure cover you. 

I invest out of state personally but am very active in this market as an agent and would be happy to help you talk through this in any way that I can, even as a sounding board. Best of luck and I hope to hear from you!

Best,

Hans

Thank you for you input, Hans. It's off market sale, so I'm not to get carried away with the initial appearance a deal. I will take you up on your offer to discuss further. I will answer a few questions and DM for more details. 

It is a four-plex; 2/4 units are vacant. Delta in the unit size is 200 sq ft.  It's very close to the Hoover Foster area of Oakland.