Is this Triplex a good buy?

Question

Hey guys! I’m looking at a unique property in my hometown. It would be my second investment in the area. I own a triplex there.

Single family and duplex on the same lot for sale

$420k asking price

Potential rents are:

Single family: $2200-$2400/m

Unit 1: $1225/m

Unit 2: $1125/m

Separate utilities

5% FHA loan

Does anyone think this is a good buy? The single family house is completely remodeled. The duplex has a slate roof that is need of work and some exterior paint work needed and basic turnover of the units interior. Let me know if you have any additional questions. Thanks!

Andrew B. · Answer

Without knowing any information about the expenses, my answer is maybe. If you can negotiate on price, probably. Again, you’ve given no data on the expenses

Nicole Heasley Beitenman · Answer

Run it through the BP calculator.

Anthony Vicino · Answer

As others have already pointed out, there's not really enough information to make an informed decision. Without knowing your market, it's had to say if $420k is good for a triplex or incredibly overpriced. If you're in the Bay Area, that's a steal. If you're in Cleveland...not so much.

So the market really matters if you're looking through the lens of appreciation.

If we break it down simply on cashflow, then from the limited information provided, it's highly likely you're going to be bleeding money each month (especially if you're living in one of the units on an FHA).

Side question: Can you actually use an FHA on two separate buildings even if they are on the same lot?

Mohammad Nur · Answer

In my area, that would be a great deal. However, I don't know about all the expenses (like property expenses, snow removals etc) that's associated with your area.

Nathan Gesner · Answer

Typically, a property needs to rent for around 1% of the purchase price to be a cash-flowing property. Cash flow is not the amount of money left over after paying the mortgage. It's paying for all your expenses (mortgage, insurance, taxes) and then setting aside an additional percent (usually around 50% of the rent) to cover future maintenance, capital expenditures, vacancy, property management, etc.

If you took 50% of your rent for expenses, that would leave you $1,200 to cover the mortgage and insurance. Your payment on a $380,000 loan will be around $1800 which means you're $600 in the hole.

I think you should watch some videos on how to analyze a property for "cash flow" as defined by BiggerPockets to get a better understanding of what a "good" investment is.

Gregory Murray · Answer

@Andrew Taxes are roughly $7500 a year, Water/sewer is $1200 a year and snow/lawn maintenance is $800 a year. Rents are very strong at $4750 a month but the asking price is pretty steep.

@Andrew B.undefined

Shiyan Cao · Answer

Seems very expensive to me

Bjorn Ahlblad · Answer

I know it is an expensive area; but I would keep looking. Does not meet my criteria.

Jacob Sampson · Answer

It is too expensive for my criteria.

Is this Triplex a good buy?

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