Is this triplex going to cash flow?

[Sean Rhodes]

I have been trying to analyze this triplex property. The seller is asking 425k. It is 3 units that are 2/1. They rent for $1250 a month. I was just wondering what I should offer to make this property be a good investment. I am super new at this so I hope this is enough information. Thanks for the advice!!!

[Ali Zahran]

well, ill take an amateur stab at this, im getting into this game and i like numbers,

425k with 20k down means a 405k loan

lets assume an interest rate at 5% and 30 year loan term, 

5k yearly taxes and a PMI at 0.5% and we will assume that insurance is 1500 yearly,

PMI = 168.75 Mnthly

Insurance  = 125 Mnthly

Taxes = 416.67 Mnthly

Total = 710.42

Principal and Interest  = 2174.12

Total Payment Mnthly is 2,884.54

now you have rent at 1250 @ 3 Units = 3750 Mnthly

3750 Income - 2884.54 guaranteed expenses (expenses that wont fluctuate) means you will have 865.46 leftover after those expenses, out of that 865.46 you have to account for landscaping, sewer, water, trash, maintenance, whatever else you may have to cover utilities wise, my recommendation is that this would be a very bad investment, say you broke even and relied only on appreciation to make money, when you factor in vacancy, which will undoubtedly happen, you are losing money on this deal