Rental Analysis

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Hi Everyone -

I've been doing direct mail marketing to absentee owners. Although I'm a rehabber, I get a lot of leads for properties that are tenant occupied. In an effort to not pass up a lead, I'm analyzing a triplex with a garage in Drexel Hill, Pennsylvania (20 minutes outside of Philadelphia).

Here are the facts:

• Rents:
  • Unit #1 - $10,200/year
  • Unit #2 - $9,900/year
  • Unit #3 - $7,080/year
  • Garage - $1,500/year
• Landlord expenses -
  • Property taxes - $6,000/year
  • Insurance - $1,000/year

I'm going to assume (for projection purposes) 8.33% vacancy rate, 6.00% property management fee and $50/unit/month in repairs & maintenance. In terms of a rental, it seems to be in decent shape. If I were to flip it though, I would update each unit (kitchen, bathroom, flooring and paint).

My opinion is to get it under contract for cash and assign it to someone that invests down in that area of Delaware County, Pennsylvania.

The owner of the property seems motivated to downsize so I'm likely to be able to negotiate him down - he's asking $200,000 for this property.

I'd love to hear the community's perspective. It would be interesting to get the perspective of a buy and hold investor in that part of Delaware County to see what they like to find in a rental in terms (ROI and monthly cash flow, refinancing requirements etc. etc.)

Looking forward to the discussion.