This is my first multifamily deal, so any advice on the numbers would be much appreciated!
Purchase price: 60k
Financing: conventional loan 20% down, 48k being financed over 15 year am at 5% interest = 379.58 a month
rent is $400 a unit, 3 units = $1200 a month = $14,400 a year
Property management: 10% of gross rent
all utilities will be paid by the tenants.
Property does not need hardly any work. Brand new roof, water heater, floors have been redone, new appliances in each unit, and it has been painted. I have still included 5k in repairs to be conservative.
Expenses seem on the high side... is the 5k that you allotted for repairs in there? If so, I like the deal. If the expenses include a conservative figure for repairs, you still seem to be looking at a CAP rate of around 12-13% on the deal. I'd hop on that all day long.
I've always been told expenses are half the gross rents. the 5k is a conservative figure in case we miss something during inspection of the building.
The biggest concern I have is that it's in a very small town, where there are no other rentals that have hit the market. Most leases in the area are week to week basis from the information I have gathered from realtors in the area.
Doesn't sound to bad to me. Can you get the management fee down closer to 8? Be careful if these are 2 bedrooms because this will cause the vacant rate to ride a little high. Also, do your homework. Get firm property insurance quotes, make sure the taxes are correct..etc.
I've verified the taxes at $895. the insurance I will have to double check on. The management fee in my area with a lot of managers is 10% there is not much I can do about that
Week-to-week leases? Are you running a hotel, a flop house or an MFR? Turn over will be high, expenses will be high, vacancy will be higher!
Remember; your business isn't based on buildings is it based on tenants.
Sounds like a weak market and I, personally, would pass. Then I would take my money to a stronger market.
rent is 2% of cost. A real good place to start.
The 50% is some sort of a guide. May not be totally accurate. Each property is different.
The new roof and other rehabs are a big plus. Rented is another plus. Get it done.