Triplex opportunity

2 Replies

In my area there is a triplex for sale.  Unfortunately I haven't seen the outside yet.  However the siding and roof are new.  This particular property is in a decent area and is fully rented.  It has been off and on the market for the last 2 years.  I believe it's a little over priced.

Multifamily rentals rarely come to market in this area.

The seller is willing to do contract for deed.

He loses a lot of profit by paying for all utilities.  The rent is also lower than other comparable rentals in the area.

What is everyone's thoughts on this?

I am just not sure if the numbers work for me.

    Multi-Unit Information
  • # of Units (Total): 3
  • Annual Insurance Expense: $900
  • Annual Repair Expense: $600
  • Annual Trash Expense: $309
  • Annual Maintenance Expense: $1,200
  • Annual Electric Expense: $3,113
  • Annual Fuel Expense: $1,188
  • Total Annual Expenses: $5,841
  • Gross Annual Expense: $6,410
  • Gross Annual Income: $25,140
  • Owner Expenses: Taxes, Insurance, Water/Sewer, Electricity, Fuel, Maintenance/Repair, Trash, Snow, Lawn
  • Tenant Expenses: Cable TV
  • Shared Amenities: Porch
    Unit 1 Information
  • # of Baths (Full): 1
  • # of Rooms (Total): 6
  • Bathroom Description: Main Floor Baths (Full)
  • Dining Room: Informal
  • # of Similar Units: 1
  • Monthly Rent: $950
  • Total Expenses: $162
  • Unit Number: 1
  • Unit Sq. Ft. (Finished): 1,080
  • Main Floor Laundry
  • Appliances: Range, Microwave, Dishwasher, Refrigerator, Washer, Dryer, Water Softener (Owned)
  • Amenities: Porch, Washer/Dryer Hookup
  • Cooling: Central
  • Annual Rent: $11,400
    Unit 2 Information
  • # of Baths (Full): 1
  • # of Rooms (Total): 5
  • Dining Room: In Kitchen
  • # of Similar Units: 1
  • Monthly Rent: $695
  • Unit Number: 2
  • Main Floor Laundry
  • Appliances: Range, Microwave, Refrigerator, Washer, Dryer, Water Softener (Owned)
  • Amenities: Kitchen Window, Washer/Dryer Hookup
  • Cooling: Window
  • Annual Rent: $8,340
    Unit 3 Information
  • # of Baths (3/4): 1
  • # of Baths (Total): 1
  • # of Rooms (Total): 3
  • Dining Room: In Kitchen
  • # of Similar Units: 1
  • Monthly Rent: $450
  • Unit Number: 3
  • 2nd Floor Laundry
  • Appliances: Range, Microwave, Refrigerator, Water Softener (Owned)
  • Amenities: Kitchen Window
  • Cooling: Window
  • Annual Rent: $5,400

Any insight would be appreciated.

@Brent Paul You haven't mentioned the asking price?

Depending on which investment "Rules" you choose within that market, the asking price should be no more than say, 100 times gross monthly rent (1% "rule", = $251,400), or, 50 times gross rent (2% "Rule", = $125,700). Without knowing your risk tolerance or your market, that's a massive variation! And of course, the asking price might be even higher, or lower!

Another rule of thumb says that you will only end up with half of the gross rent in your pocket (the 50% "Rule"). Would those numbers work?

You already answered some of your own questions about possible profit improvements; it depends on your belief in overcoming the hurdles that will help you decide whether it's worth it. Cheers...

Thank you for the response.  The house is currently listed at 220k.  If everything is renovated inside then price is about right.  If not it will cost quite a bit to update everything from the 60's decor to present day.

The units electricity would either need to separted so they each pay their own electricity or the rent should go up.  The rents are quite a bit below the going rate in the area, especially since the renter pays no utilities.

I do have some concerns about plumbing and wiring since the house was built in 1897.  A good friend of mine had a house of the same age and it was a nightmare rewiring the house and fixing old pipes.

This would be a long term buy and hold for me. 

I don't have quite enough funds for 20% down which is why I was thinking contract for deed would work best for me.

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