General Real Estate Investing

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Theodore Ezzedine
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First deal, total newbie. Need advice if possible please.

Posted Oct 15 2022, 15:11

Good afternoon,

I am close to purchasing my first deal. I do not feel as if it is a good deal and I am a little hesitant. 

The property is located on Glenmore in Cincinnati. The deal is a 4plex at 260k. Currently there is 4 tenants, 2 under rent. I should get 700-750 per door. After the inspection, there was pretty much only issues with the sewer line. However, it was an improper pitch. I got a 2nd analysis, it does not need an immediate repair but 10-15 years I can be about 15-20k. I have an appraisal next week. I went 10k over asking which I should not have done.

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Replied Oct 15 2022, 15:30

What is your question?  Assuming you are renting out all 4 units, are the tenants on leases or month to month? Do the rents include utilities or are those paid for by the landlord? Are there any restrictions on rent increases?  What are the costs with your mortgage, property taxes, etc?

Hopefully your offer states that you get copies of the leases/rental agreements, prorated rent and the security deposits transfer over to you.

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Theodore Ezzedine
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Replied Oct 15 2022, 15:39

The owner did not have any lease or rental agreements. Property taxes, insurance, and everything all included should be about 1700 a month all together. For the current tenants, they pay gas an electric. Owner pays heat, water, trash, and sewage.  I do believe that is placed within the offer. I do not think that the property will get appraised appropriately therefore I can still get out of the deal  with the appraisal contingency. 

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Carolyn Yates
  • Real Estate Agent
  • Sarasota, FL
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Carolyn Yates
  • Real Estate Agent
  • Sarasota, FL
Replied Oct 15 2022, 16:10

At first glance I would be very excited about that deal.  You are achieving over 1% on monthly rents which is almost unheard of in my market.  If your mortgage and expenses only total $1700 per month and your rents will be $2800 to $3000 I would say it’s a great deal!  Can you find me one like it!

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Natasha Young
  • Real Estate Agent
  • Cincinnati OH, USA
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Natasha Young
  • Real Estate Agent
  • Cincinnati OH, USA
Replied Oct 15 2022, 17:01

If you are hesitant and unsure, have you had a conversation with your realtor? Maybe they can answer your questions to make you feel a little bit better about the deal. Are you still within the inspection period? Maybe you could negotiate  the price due you having to repair the sewer line? And did you make sure to have comparables done and that the rents are actually under market value for that area and you are able to get what you want for rents? I know that the rents for that side of town tend to average lower than other areas.These are things to just think about and to double check being that you are feeling uneasy about the deal.

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Jonathan W.
  • Kansas City, KS
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Jonathan W.
  • Kansas City, KS
Replied Oct 16 2022, 16:24

@Theodore Ezzedine everyone feels this way about first deal. What if this, what if that. If numbers make sense, get in the game. Life changing.

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Marco Fiore
  • Real Estate Agent
  • Cincinnati, OH
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Marco Fiore
  • Real Estate Agent
  • Cincinnati, OH
Replied Nov 10 2022, 08:29

There are many questions to be answered here before knowing if its a "good" deal or not. In terms of what you posted, I agree with Carolyn. A quadplex for 260k seems very reasonable, especially if you are able to get the 650-800 a door. Also, it depends on what your goals are for the property. If you want to sell it within the next 10 years, not getting the sewer line fixed might depreciate the value of the home once you want to sell. 

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Patrick Drury
  • Real Estate Agent
  • Columbus, OH & Cleveland OH
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Patrick Drury
  • Real Estate Agent
  • Columbus, OH & Cleveland OH
Replied Nov 10 2022, 09:12

@Theodore Ezzedine
I saw that you mentioned the seller didn't have leases. You should have the tenants sign an estoppel before closing if you don't have a copy of their leases. 

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Eliott Elias#2 All Forums Contributor
  • Investor
  • Austin, TX
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Eliott Elias#2 All Forums Contributor
  • Investor
  • Austin, TX
Replied Nov 10 2022, 21:07

Cash flow is great, if you don't want it i'll take it