I'm looking to purchase my first rental property. I found a distressed seller in Columbus GA, for what looks to be a great deal, but would love another set of eyes on my analysis. Let me know your thoughts:
Property details: 4 duplex's (8 doors) -6 of the 8 doors are: 1br 1ba, 500sq ft, current rent $300, market rent $600-$900. -2 of the 8 doors are: 2br 1ba, 700sq ft, current $375, market rent $650-$950 Located in Columbus GA 30913
Before rehab costs and increasing rents, I'm calculating the current cash flow at -7% or -$263. Post-rehab and market rent, I'm calculating cash flow at 4% or $268
This looks like a buy to me, but let me know what you think! >pictures of the unit <
@Kam Ajani did you run a capex and repair budget and $175 and $250 were the numbers you arrived. Go to your favorite flooring store and ask what the commercial warranty is? Most will be 10 years, so that is your lifespan. You have 6*500 sf+ 2*700 sf= 4400 sf. My area it is $6 sf. 4400*$6=$26400/120 months = $220 per month for 1 capex item. Guess you won't do appliances, roofs, driveways, hvac, etc.
Repair budget. Can you do a turn for $1000. New paint, patch walls,deep clean. etc. Let's just say you repair each one every 3 years. 8 units*$1000= $8000. I average 1 service call per unit per year. Costs me $150 per time. 8*$150=$1200. Total cost over 3 years=$3600+$8000 turnover=$11600/36 months= $322 per month. Maybe you will get lucky and your costs will be lower.
Sub 1k properties need higher percentage of rents, that is why it is important to run your budgets.