Feedback Needed on Deal Analysis

1 Reply

I’m a small time investor in the Midwest (currently own 12 units) looking for a feedback on a potential deal.

Key Numbers:

Total Units - 4

Purchase Price - $220,000

Monthly Rental Income - $2200 ($550 for each unit buy my market analysis is closer to $600)

Mortgage - 15% down at 4.0% (5 Year ARM)

Projected Monthly Cash Flow (factoring in the increase in rent to $600) - $600

Cash on Cash ROI - 20%

It seems like a no brainer but it would likely make it the highest purchase in the area (with other similar 4plexes), with $210K being the next closest comp. Plan is to hold it long term so not necessarily worried about market fluctuations over the next 5-10 years, but it scares me that I’m paying above everything else in the area. Am I overthinking this?

I have no insight into your specific market or the property but if the quadplex is already producing $2,200/mo and your numbers are accurate, it's a solid deal. 

Personally, I would consider pushing for a fixed rate during your term to eliminate interest rate risk.