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
@Steve Hall yes I do
@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 .
@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.
10% in repairs low
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.
@Frank Procopio how much should I estimate for repairs ?
@Chase Louderback I think the $1000 section 8 tenant keeps his stuff in the garage .
@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
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
@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
@Frank Procopio I think only one is a section 8 tenant . And no property manager . Just my own estimate .
@Frank Procopio how would I know what class property it is ?
@Frank Procopio the property is in Newburgh new York
@Faysal Alam https://www.reonomy.com/blog/post/property-class-how-to-identify-and-search
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?
@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 ?
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?
@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.
@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
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?
@Victor S. I'm not to sure with the repairs . This would be my first rental . It's fully occupied right now .
@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