Quad or Duplex, 1st time eval unsure of numbers

Multi-Family and Apartment Investing
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Quad or Duplex, 1st time eval unsure of numbers

Daria B.
Rental Property Investor · Gainesville, FL · Member since 2015 · 1k+ posts · 432 votes

I've stumbled upon a duplex (FSBO) and a quad. I'm not able to find a good spreadsheet and wonder if what I analyze for SFR will suffice for multiple family units.

1st time multi for me.

I looked at the quad exterior and the neighborhood earlier today and attempted to put together some numbers based on what I found so far.

Built:1980 (roof is a concern since it's never been replaced. upon visual inspection it needs to be replaced) 

So I'm told, owner bought for son in school and now wants to sell.

Appears current owner has done no upgrades since purchase in 2005

Purchase -

  • $237k list (owner purchased in 2005 for $225)
  • $188k offer (all systems original including roof) this may change after viewing
  • 30yr term
  • 4.5% rate
  • 20% down
  • $150,400 note
  • $762.05 (P&I)

Rental -

Called a couple of places with same-like-properties. Asking $795 for one and the other is $650 (not sure why so low).

  • 10% vacancy ($2880)
  • $800 rent ($3200)
  • $333.33 taxes ($4000 2015 taxes)
  • $133.33 ins ($1600) (called insurance company and gave them address for a quote)
  • 10% R&M ($3520 per yr)
  • 10% capX ($3520 per yr)
  • $1,106.67 Monthly GOI

Returns -

  • 20% COC
  • 9.28% Cap Rate
  • $1,453.33 Monthly NOI
  • $17,440 Annual NOI
  • $8,295 Annual Cash Flow
  • $691 Monthly Cash Flow

What if anything am I missing? The cash flow looks great and is far and above keeping my nose above water. :)

What else should I be considering with a quad?

Also, if anyone has a multi spreadsheet that will assist me rather than use one for SFR please let me know.

Thanks

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  • Michaelina Stathakos
    Real Estate Investor · Houston, TX · Member since 2015 · 24 posts · 16 votes
    10y

    If you are going with a traditional loan company make sure you have the DP % correct. We did numbers for our first quad with a 20% DP and then 2 weeks before closing were told it was 25% DP which can be a total game changer.

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  • Daria B.
    OP
    Rental Property Investor · Gainesville, FL · Member since 2015 · 1k+ posts · 432 votes
    10y
    Originally posted by @Michaelina Stathakos:

    If you are going with a traditional loan company make sure you have the DP % correct. We did numbers for our first quad with a 20% DP and then 2 weeks before closing were told it was 25% DP which can be a total game changer.

     Thanks, I will up the percentage just to make sure I'm covered but will talk to my lender to make sure if I pursue this that we are all good.

    0Reply
  • Martin Scherer
    Rental Property Investor · Liberty Hill, TX · Member since 2014 · 285 posts · 166 votes
    10y

    hi Daria,

    Where is the money to replace the roof to come from? No upgrades in the units since 2005? You are going to need to sink some money into them to get top dollar rents. That will affect your COC return. How much is that new roof? Have you priced that? If there have been no upgrades for 10 years....carpets, paint, health and safety upgrades etc.

    Are all the units separately metered for utilities?  Who does landscaping? Is there a fence...what is it's condition.  If you haven't been inside you can expect some surprises.

    Just a few thoughts

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  • Daria B.
    OP
    Rental Property Investor · Gainesville, FL · Member since 2015 · 1k+ posts · 432 votes
    10y

    Got an update to the numbers I was using a quad that is "not" what the agent told me. But I think that one I was looking at is for sale as well. 

    Anyway, here is an update based on this other quad. Same set up 2/1.5, built 1980, a little less sq ft, roof was done in 2008 and the inside looks more than decent. I think the systems (hvac, w/h) are the original. I can only find permits for the roof. Scheduling to look at it this weekend if it's empty. The agent thinks it is, they don't have the listing so they have to check with the list agent.

    What do you think? I did this at the list and 80% of the list trying to get a range.

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  • Daria B.
    OP
    Rental Property Investor · Gainesville, FL · Member since 2015 · 1k+ posts · 432 votes
    10y
    Originally posted by @Martin Scherer:

    hi Daria,

    Where is the money to replace the roof to come from? No upgrades in the units since 2005? You are going to need to sink some money into them to get top dollar rents. That will affect your COC return. How much is that new roof? Have you priced that? If there have been no upgrades for 10 years....carpets, paint, health and safety upgrades etc.

    Are all the units separately metered for utilities?  Who does landscaping? Is there a fence...what is it's condition.  If you haven't been inside you can expect some surprises.

    Just a few thoughts

     Hi Martin,

    Thanks for answering.

    See my update on the original post. There was some mix up in the property address. I looked this one up and the roof is 7 yrs old (replaced in 2008).

    I also got an education from my roofer about how to do a quick estimate before I bring him in to do a real estimate.

    They "say" lots of updates ( like kitchen and W/H) but I don't see HVAC included as being updated. If they are the original it would make it 35 yrs old.

    I will be looking the unit and noting all the interior such as appliances, flooring, walls, etc. Thanks...

    Looks like there is a "communal" back yard area. I'm not sure how that works with a quad but I guess the tenants work it out. It is fenced in and I know that is a consideration over time since it's wood.

    The units I believe are separately metered but I will verify that upon initial inspection. I recently looked at a duplex and found the entire building is run off one meter that the owner pays so the other two tenants only pay their electric. For this to work it has to be separately metered.

    Thanks for giving me more to think about...this is 4 times, or I guess 3 times more than looking at a SFR. Luckily the financing won't differ that much in that I don't have to deal with commercial.

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