Milwaukee MF Analysis. Always Negative Cash Flow...
I'm not seeking to buy at the moment so I am using this time to practice. There is a neighborhood of interest that is up and coming and has some nice 4-plexes. I have considered contacting the sellers (off market) to see if they would sell. I've been searching the property history to see what the purchase price was. Then, using my numbers calculate the cash flow to reach an acceptable price. After looking at the history, it seems that these are terrible deals. I've noticed in my market many investors do not factor in all of the expenses, self manage, do landscaping, etc. This has resulted in an inflated market. Uneducated investors, not running their numbers correctly and being a jack of all trades rather than hiring professionals. See deal below based of 2005 purchase price.
Sale Price 2005 = $295,000
Rent = $3,200/m ($800 per unit)
Mortgage = $1,046/m (30% Down 4.5% Interest 30-year Fixed)
Taxes = $625/m
Insurance = $150/m
Vacancy (1-month) = $266
Property Management 10% = $320/m
Lease Fee = $166/m ($500 per unit, once a year)
Maintenance = $200/m ($50/m per unit)
CapEx = $800/m ($200/m per unit)
Lanscaping = $100/m (estimate, not for sure)
Total Expenses = $3,673/m
Net Cash Flow = -$473/m
I know some people on here may think my numbers are off. In order to properly upkeep the property $200/m per unit for CapEx seems appropriate. Also, since it is a apartment building 1 year turn over isn't unheard of. I'd be interested in getting some feedback on the numbers I have put together. Am I missing something here???