Is this a good deal ?

Multi-Family and Apartment Investing
7yFollow

Is this a good deal ?

Faysal Alam
Real Estate Agent · New York City, NY · Member since 2017 · 150 posts · 26 votes

The property is located in upstate New York , it is 2 attached properties with one deed . Total of 4 units. "1's rent is 1000 for a one bedroom with the lease with section 8 across the hall has a month-to-month lease for 900 a month one bedroom the other one is 850 a month one bedroom just moved in month-to-month lease and the one downstairs has a month-to-month lease or rent is 750 " according to current owner for a total of 3500/Month = total of 42k/year . I would be buying with all units rented as currently set up . The expenses are as follows, conservative estimates .

$10k /year taxes or $833/month

2500/year insurance or $209 month

10% vacancy or $350 a month

10% repairs/maintenance or $350 a month

10% cap ex or $350 a month

10% property management or $350 a month (the property is an hour and a half to two hours away do you think it would be better to do it on my own instead of hire someone)

Debt service at $700 with a 20% down payment on 160k . I get a cash flow of $358/month. Is this deal worth doing? Also there is a empty garage that is attached to the property that has potential to become another unit. Also what do diligences should I do. Tenants pay all their own utilities

3Reply
126 views

Most Popular Reply

Steve Hall
Rental Property Investor · TX · Member since 2019 · 303 posts · 364 votes
7y

@Faysal Alam If you've looked at the P&L and the RR and given us all the accurate numbers, and you've viewed the property and feel it is in a good neighborhood and in good condition, I would say this is an awesome deal. That said, whenever I see an awesome deal, it makes me 10x more cautious. Is it in a flood zone? Are their liens? HOA? Eminent domain? (That kind of thing...)

Make an offer to tie it up. Submit your pre-approval letter with your offer. Put no more than $1,000 down, drag out the inspection time to 45+ days, make sure to add every contingency you can, and then start your due diligence investigation.

Good luck!

8Reply
See this reply in the discussion

58 Replies

Jump to latestLatest
  • Steve Hall
    Rental Property Investor · TX · Member since 2019 · 303 posts · 364 votes
    7y

    20% down on a 160k loan is $32,000. Even if this is a good deal, do you have $32,000 @Faysal Alam?

    I ask this because I read your previous post.

    1Reply
  • Faysal Alam
    OP
    Real Estate Agent · New York City, NY · Member since 2017 · 150 posts · 26 votes
    7y

    @Steve Hall yes I do

    0Reply
  • Faysal Alam
    OP
    Real Estate Agent · New York City, NY · Member since 2017 · 150 posts · 26 votes
    7y

    @Steve Hall that post was based off properties in New York City which are around anywhere from 400 k to 650 k the ones I was looking at . And it was for property that I would live in this is for property that's an investment .

    0Reply
  • Steve Hall
    Rental Property Investor · TX · Member since 2019 · 303 posts · 364 votes
    7y

    @Faysal Alam If you've looked at the P&L and the RR and given us all the accurate numbers, and you've viewed the property and feel it is in a good neighborhood and in good condition, I would say this is an awesome deal. That said, whenever I see an awesome deal, it makes me 10x more cautious. Is it in a flood zone? Are their liens? HOA? Eminent domain? (That kind of thing...)

    Make an offer to tie it up. Submit your pre-approval letter with your offer. Put no more than $1,000 down, drag out the inspection time to 45+ days, make sure to add every contingency you can, and then start your due diligence investigation.

    Good luck!

    8Reply
  • Frank Procopio
    Real Estate Agent · Naples, FL · Member since 2016 · 298 posts · 268 votes
    7y

    10% in repairs low

    1Reply
  • Chase Louderback
    Real Estate Agent · Luray, VA · Member since 2016 · 459 posts · 293 votes
    7y

    Looks like a solid deal to me as long as everything you have reported is accurate.  Are the other units that are lower in rent the same size, condition, etc., as the $1,000/mo unit?  You could bump some of those a bit right on acquisition if thats the case and that will help your numbers a bit more.  Just make sure you have some reserves set aside in case there is turnover.  

    Also, could you rent the empty garage to a tenant for $50 or $100 more a month?  That may be an easy way to add a little revenue.

    1Reply
  • Faysal Alam
    OP
    Real Estate Agent · New York City, NY · Member since 2017 · 150 posts · 26 votes
    7y

    @Frank Procopio how much should I estimate for repairs ?

    0Reply
  • Faysal Alam
    OP
    Real Estate Agent · New York City, NY · Member since 2017 · 150 posts · 26 votes
    7y

    @Chase Louderback I think the $1000 section 8 tenant keeps his stuff in the garage .

    0Reply
  • Faysal Alam
    OP
    Real Estate Agent · New York City, NY · Member since 2017 · 150 posts · 26 votes
    7y

    @Chase Louderback also and update . Taxes are $10170 or $848 . And insurance would actually be closer to $271 . The property is an 1 1/2-2 hours away do you think I should self manage ? How would I handle things like snow removal and things of that sort

    0Reply
  • Frank Procopio
    Real Estate Agent · Naples, FL · Member since 2016 · 298 posts · 268 votes
    7y

    I would really need to know about more of the condition of the property etc. Is it a c property? You mention management at 10 percent is there a manager currently in place that can verify expenses? I have section 8 tenants and I know I soend a decent amount on repairs every year alone when the property has it's annual inspection

    1Reply
  • Faysal Alam
    OP
    Real Estate Agent · New York City, NY · Member since 2017 · 150 posts · 26 votes
    7y

    @Steve Hall not that I know of . I was a bit off on the taxes it was actually 848/month last year and insurance would be $271/month

    0Reply
  • Faysal Alam
    OP
    Real Estate Agent · New York City, NY · Member since 2017 · 150 posts · 26 votes
    7y

    @Frank Procopio I think only one is a section 8 tenant . And no property manager . Just my own estimate .

    0Reply
  • Faysal Alam
    OP
    Real Estate Agent · New York City, NY · Member since 2017 · 150 posts · 26 votes
    7y

    @Frank Procopio how would I know what class property it is ?

    0Reply
  • Faysal Alam
    OP
    Real Estate Agent · New York City, NY · Member since 2017 · 150 posts · 26 votes
    7y

    @Frank Procopio the property is in Newburgh new York

    0Reply
  • Frank Procopio
    Real Estate Agent · Naples, FL · Member since 2016 · 298 posts · 268 votes
    7y

    @Faysal Alam https://www.reonomy.com/blog/post/property-class-how-to-identify-and-search

    1Reply
  • John BucciPro Member
    Real Estate Agent · Tarrytown, NY · Member since 2016 · 149 posts · 63 votes
    7y

    4 units for 160k in Newburgh sounds like a deal to me. Especially if occupied and in decent shape. Rents sound low. 

    You probably will pay water though, no?

    [email protected]914-420-8497
    0Reply
  • Faysal Alam
    OP
    Real Estate Agent · New York City, NY · Member since 2017 · 150 posts · 26 votes
    7y

    @John B. Yea water and garbage . I'm trying to figure out how much that will cost me . I'm thinking about self managing to increase the cash flow . It's 2 hours away . Do you think that's a good idea ?

    0Reply
  • John BucciPro Member
    Real Estate Agent · Tarrytown, NY · Member since 2016 · 149 posts · 63 votes
    7y

    Depends on your goals, your job, etc. Are you flexible to answer calls all day and go up there when necessary? Otherwise you will have to build out a team... very doable but not easy. 

    I'd recommend hiring management. They will save you money on repairs/gas, run the properties more efficiently.... and let you focus on your job or growing your portfolio. 

    Is it worth saving the $350/ month to you.. Can you make that $ up at work and avoid dealing with tenants, repairs, etc.? Are you trying to get out of your job?

    Everyone's different 

    [email protected]914-420-8497
    3Reply
  • Chase Louderback
    Real Estate Agent · Luray, VA · Member since 2016 · 459 posts · 293 votes
    7y

    @Faysal Alam It sounds like you would be able to increase rents a bit, but you really need to get numbers from the broker (or you can call the town/provider) for the water bills.  That amount could easily eat up your cash flow.  Look into submetering and billing back if you do decide to move forward with the property in order to lower your expenses.

    2Reply
  • Faysal Alam
    OP
    Real Estate Agent · New York City, NY · Member since 2017 · 150 posts · 26 votes
    7y

    @John B. Right now I work at a pizzeria . I work only mornings Tuesday Wednesday and Friday . 11-5 . But I'm free most weekdays . Weekends I work all day . My goals are to make enough cash flow to replace my wage paying job . But definitely won't get done with this one property

    1Reply
  • Victor S.
    WorldWide · Member since 2016 · 1k+ posts · 1k+ votes
    7y

    double-digit c-o-c - not bad. figure out your expenses and go from there. water could be in hundreds a month, so your $358 would have to account for that. when doing inspections, bring a contractor/plumber in to see what all is involved (permits, etc.) to get this done. 

    does the property need repairs? 

    0Reply
  • Faysal Alam
    OP
    Real Estate Agent · New York City, NY · Member since 2017 · 150 posts · 26 votes
    7y

    @Victor S. I'm not to sure with the repairs . This would be my first rental . It's fully occupied right now .

    0Reply
  • Faysal Alam
    OP
    Real Estate Agent · New York City, NY · Member since 2017 · 150 posts · 26 votes
    7y

    @Chase Louderback just contacted the owner he said 300-400 every quarter . So I'd say $133 a month . And insurance is actually 271 . So the cash flow of the property with 10% for property management would be actually $146 and not $358

    1Reply
  • ROTIMI OLUWO
    Lawrenceville, GA · Member since 2014 · 41 posts · 18 votes
    7y

    dud

    1Reply
  • Faysal Alam
    OP
    Real Estate Agent · New York City, NY · Member since 2017 · 150 posts · 26 votes
    7y

    Just an update . So my numbers were a bit off . I actually have to put down 25% of 160k which is 40k plus closing costs . So the current rent roll is 3500/month . 4 units rents are (1000,900,850,750) =$3500

    Expenses are such.

    P&I $700 (could be lower, estimate)

    Taxes were $10173 last year = $848/month

    Insurance quote $271

    10% maintenance/repairs = $350

    10% cap ex = $350

    10% vacancy = $350

    10% property management= $350

    Water $1600/year or $133/month

    Garbage = still not sure .

    So now after all this I get a cash flow of $148/month not accounting for garbage . Is this still a good deal ?

    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free