Analyzing a 5 Unit Rental
Good Afternoon!
I've been looking at a bunch properties and i think i've finally found one that would be a good first investment and i was wondering if the community at BP could help me out at all?
It's a 3 story, 5 unit apartment building. It's in the center of a small town that's growing.
The taxes seem really high, but it still seems to cash flow when i run my numbers.
Question: How would I or could I appeal the taxes and get them lower?
I'm not sure if i'm missing anything else, so any advice would be great before I jump in...
Here are my figures (calculated monthly)
Purchase Price: $93,000.00
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Total Rent: $2,730.00
Insurance: $52.00
Property Management: $163.80
Capital Expenses: $273.00 (i just used a 10% estimate)
Maintenance: $136.50 (5% of Total Rent)
Vacancy: $163.80 (avg vacancy for the area is 6%)
Utilities: $448.25 (this number seems high, but i flesh out below where it's coming from)
Taxes: $593.95 (this seems really high and i'm wondering if there's a way to get it down.
Mortgage: $499.00 (93k @ 5% interest rate over 30 years)
Cash Flow: $399.70
Net Income - Mortgage: $898.70
Cap Rate: 12%
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It needs 1 new hot water heater, but he'll have that replaced before purchase.
1 unit is vacant, but again, it'll probably be filled before i purchase it.
There could definitely be some other repairs, but nothing major and just maintenance things that aren't urgent.
Utility Explanations
Monthly Utility Averages for 2017 YTD:
- Gas: $72.43 (for hot water only, no heating bills are paid)
- Electric: $39.31 (For common area lighting and circulating pumps on boilers)
- Water: $72.95
- Sewer/Refuse: $263.56 (Charged by the unit for refuse + usage for sewer portion)
- Total Monthly Utilities: $448.25
This seller also has other properties for sale that if this one works out, it might be a good way to grow my portfolio.