I'm looking to buy and hold in the NYC/ Northern NJ area. With high house prices and high property taxes, most houses in the area cannot achieve cash positive. Here's one that I found near Newark (OK neighborhood):
Asking price $190,000 (short sale)
Income: $1000 / month x 3 units = 36,000 per year
Property tax $9000 / year (yes, 9 thousand)
Utilities: 1,500 / year
Property management: $3,600 /year
Please let me know what do you think.
Do the tenant pay for:
Sewer and Water?
How much is the insurance?
How would you finance it and how much would your payments be?
$9k is a lot for taxes in Newark Unless that's newer construction. If that's the case then that would indicate separate utilities in which $1500 is good since you would only be responsible for water, sewer and house electric. However rents are low as those 3 beds should be able to get you $1300/mo each. Does this deal come with existing tenancy? If so have you reviewed the leases, check the payment history, Etc?
On the face of it, the deal seems to bear more investigation. There are lots of other expenses like fix-up costs and annual maintenance you didn't mention. The utility bill seems low for 3 units no mater where you are. The property management seems low since lots of them charge extra to do change overs.
Short sale, lots of questions there too but sounds like you should keep digging. Find out if the bank as approve the price or not. If not you might be wasting your time.
Whenever analyzing a deal you should also add these expenses from the gross rent
5% cap ex
Watch this video by @brandon turner it will help you better understand how to analyze the deal
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