My first deal deal on a quad 9.5 cap ( thoughts and suggestions)

[Colton Sibley]

I'm need some help understanding a deal I'm working. It will be owner financed which is a help to him because he is offloading to get into a new business. I need help understanding the Cap rate to look for and to run a comp analysis for surrounding units in the area. There are several ways to force appreciation into the unit so I see a great upside with it. I don't want to get caught staring at a shiny object. With this being said how would one structure a seller finance deal on a quadplex for a short term? Down payment by keeping the same income moving to the seller until I refi? Need some help here on this one and some ideas. Operating Income: 5,434 NOI- 16,766 per year Asking 175k What do these numbers look like?

[Todd Dexheimer]

Ok, here's the bubble burst. Taxes will go up when you buy unless it's already assessed at $175k (check with your county on how they assess based on new purchase price). Lawn maintenance seems very low for South Carolina unless there is no yard and it's just landscaping. Also, there is no maintenance costs, which will run 10-15% of the gross rents. You don't have a replacement reserve (5%), Also, admin costs (bank fees, accountant fees, city license and inspection fees, etc). Last is that you will have vacancy, so you need to calculate that. On a 4 plex I always use 10% of the gross. 

Here are my numbers: 

Potential Income = $22000

vacancy = $2,200

Economic income= $19,800

Expenses:

Taxes = $1667 (likely to be closer to $2000)

Water/sewer= $1800

Garbage = $480

Lawn = $350 (likely higher - get a quote)

Insurance = $1137

Maintenance = $3000

Admin = $440

Replacement reserve = $1,100

Expenses: $9974

Income = $9,826

When I run my numbers I also use a management fee of 10% of the collected income. One added income thing you can do is add coin laundry. That likely will add $50/month of income.