What would you offer? 4unit. My first rental
I'm looking to take my first step into rei. I have told everyone I know what I intend to do and today my dad told me that a coworker of his wants to sell his 4 unit. It is located in a nice area of Milwaukee. I did a little research and he paid 315k in 2005. He sent me an email stating the current assessed value at 234k and said make an offer. I am curious to here what some of you experienced investors have to say. Here are some of the numbers I know.
Brick 4 unit
2 bed 1 bath units
8 car off street parking
Appliances included
Newer water heaters and furnaces
$2700 gross monthly rent = 32400 per year
Minus 10% vacancy rate= 29160
Take 50% off for ballpark expenses = 14580
14580 @ 12% cap rate= $121500
Or 10% cap rate= $145800
I am figuring ballpark numbers to see if we would be in the same ballpark on price as to what I would be comfortable with. He is looking for a cash sale or willing to do some seller financing which is helpful. To me it seems that we would be off by quite a bit. He claims to cash flow $700/month. The only way I can figure that at the range I think he is looking to get is to not figure cap-ex, vacancy, property management, and normal maintenance. Any input would be very helpful. Thank you in advance.