Analyzing my first fourplex
Hey all, I'm analyzing a fourplex deal and wanted your input. I understand the numbers don't look great, I just want to know if I'm being too conservative in my estimates (especially on the turncosts, capex, maintenance)
Note this analysis assumes a cash purchase.
| Property Info | MyFourPlex |
| Occupancy | Occupied |
| Size | 2000 sqft | 1 bd apt homes |
| Year built | 1960's |
| Neighborhood | Class C |
| Sale Price (USD) | 165,000.00 |
| Closing Costs | 1,200.00 |
| Rehab + Repair | 2,000.00 |
| Total Capital | 168,200.00 |
| Rent | |
| Monthly Rent (4 units) | 1,935.00 |
| Vacancy Rate | 0.09 |
| Annual Gross Rent | 21,130.20 |
| Annualized Expenses | |
| Property Taxes | 2,100.00 |
| Property Management Fees (10%) | 2,322.00 |
| Leasing Fees | 245.00 |
| Property Insurance | 2,200.00 |
| HOA | 0.00 |
| Repair/Maintenence | 1,400.00 |
| Utilities (Lawn, Trash) | 1,600.00 |
| Annual Turncost (Property management fee + 1000/apartment) | 5,935.00 |
| Total Operating Expenses | 15,802.00 |
| Income | |
| Net Operating Income | 5,328.20 |
| CapEx Reserves | 1,600.00 |
| Total Net Cash Flow | 3,728.20 |
| CapRate | 3.23 |
| Cash-on-Cash (post reserves) | 2.22 |
It wasn't clear if the table got posted in the original posting..
Here's a screenshot
For class C property, your numbers are not conservative, but in fact, could be overly optimistic. It really depends on neighborhood, type of tenants, etc. Your per turn cost likely will be higher due to damages to the unit. I have more turns per year for class C properties. Your initial closing cost and rehab cost all seems very low.
@Ahmad D. what about this deal makes you interested in purchasing? If those are the numbers, you're way better off investing into the stock market or bonds.
@Spencer Cornelia this was just an exercise to get feedback whether my due diligence numbers/assumptions were valid
I agree that this is not worthwhile proceeding under the current numbers :)
Originally posted by @Ahmad D.:Hey all, I'm analyzing a fourplex deal and wanted your input. I understand the numbers don't look great, I just want to know if I'm being too conservative in my estimates (especially on the turncosts, capex, maintenance)
Note this analysis assumes a cash purchase.
Property Info MyFourPlex Occupancy Occupied Size 2000 sqft | 1 bd apt homes Year built 1960's Neighborhood Class C Sale Price (USD) 165,000.00 Closing Costs 1,200.00 Rehab + Repair 2,000.00 Total Capital 168,200.00 Rent Monthly Rent (4 units) 1,935.00 Vacancy Rate 0.09 Annual Gross Rent 21,130.20 Annualized Expenses Property Taxes 2,100.00 Property
Management Fees (10%)2,322.00 Leasing Fees 245.00 Property Insurance 2,200.00 HOA 0.00 Repair/Maintenence 1,400.00 Utilities (Lawn, Trash) 1,600.00 Annual Turncost
(Property management fee
+ 1000/apartment)5,935.00 Total Operating Expenses 15,802.00 Income Net Operating Income 5,328.20 CapEx Reserves 1,600.00 Total Net Cash Flow 3,728.20 CapRate 3.23 Cash-on-Cash (post reserves) 2.22
I feel like the beauty of a quadplex is it’s easy to self manage, Lots of savings there. But the utilities look low, does that include heat?
@Eric Mcginn it actually does not, those are paid by tenant