I'm trying to buy a 3 family property in Yonkers New York I need help making a decision I have done my calculations and it seems like a decent deal but I need help to make sure it is a good deal.
Those are the info of the property:
Property price $385000
Down payment: 20%
Mortgage monthly:$2174 yearly $26088
Property taxes $6300
Property Income yearly: $ 51900
Insurance yearly: $1500
Heat and water yearly: $8000
Repairs+Misc expenses (assuming, not 100% sure) yearly $2000
Can you please help me analyze the deal and let me know if it is worth going for it?
Thanks in advance
I tried to run your numbers and had to use a very high interest rate (7.6%) to match your mortgage numbers. With that, here is the calculation:
Purchase Price = $385,000
Down Payment =$77,000
Loan Amount = $308,000
Gross Income = $51,900
Less Vacancy of 5% = -$2,595
Effective Gross Income = $49,305
Gross Rent Multiple = 7.42 --> Use this to check and see if GRM is in line with similar properties
Expenses (Using your numbers mainly):
Property Taxes = $6,300
Insurance = $1,500
Heat & Water = $8,000
Maintenance & Repairs = $2,595
Total Expenses = $18,390
Net Operating Income = $49,305-$18,390 = $30,915
Cap Rate = 8.03% --> Use this to check and see if cap rates are in line with similar properties
Subtracting Annual Mortgage from NOI = $4,819 in net cash flow or 6.3% cash on cash
Adding back principal reduction, gives Total Return of $7,603 or 9.9%
I look for a minimum of 10% on the Total Return line (given the expensive real estate where I live). Your property would pass the Total Return for me in California. However, you should first check out the Cap Rate and GRM before you get to the cash on cash or Total Return to make sure you pay the right price and that the property generates sufficient cash for your troubles.
Hope this helps and good luck.
Thanks a lot for your input.
I really apreciate it.