I'm interested in buying my first fourplex but wanted to ask about your opinion. Asking price is 316000. All apartments are rented for 625+ electricity. Property tax is 4440 a year. Owner pays water and waste water. Now my family would be living on one of the apartments. Is there any chance someone could tell me what my rent would have to be in relation with a purchase price.
From the papers we saw (print out, not a real utility bills) it says that they grossed 28 000 in 2013 minus insurance and water which was about 7500 for a year. They didn't minus their property tax so it looks like their net was around 20k
BTW we are aiming for 280k for the property
Thnx in advance
Unless that property is owned outright, they may have grossed 28000 but that didnt net that. 650/month (just to be conservative) x 4 x 12 months= $31200 gross for the year. 31200- 7500 for insurance and water= 23700. 23700- 4440 property tax= 19260. If there was a loan on the property say 25% down , 4.5% APR 30 years for a purchase price of 280000; then the mortgage would be 1064/month or 12768 for the year. That would leave 6492 for the year net. Of course you would have some tax breaks for your total income gained will be a little more.
If you purchased the home with 5% down for a purchase price of 28000/30 years/4.5 the total mortgage would be 1347.78 (16173.36 /year). If you rented the other apartments for 650 x 3 x 12=23400 year. So 23400-16173.36-4440-7500= -4713/year equaling =393/month out of your pocket for expenses. of course your tax benefits are not included, also not factored in is the 50% rule (which would leave you with $975 out of pocket). 90% vacancy not factored.
To me it is not a great deal but I guess it depends on your market and goals.
First I wanna apologize since the number for water was wrong. Just found that out today. It is 2300/year and insurance is 1150/year.
Now I was listening to podcast today and 1% was mentioned. So if I have four apartments at 625 it is 2500 a month which means I should buy a property for 250 000.
Also interest rate is 3% and it is 25 years with 5% down.
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