Is this an O.K. deal? 5-plex
The property I'm looking at is a "rehabbed" 5-plex. The owner bought it earlier this year for $290k but really didn't do much to it other than some minor maintenance and paint the exterior (ugly). There's room for improvement to increase rent about $250/mo. One problem is he has very little documented expenses so I'm using figures from other props on the market. FYI--it sold to the last owner before the peak for $550k.
5-plex in a B-/C+ area. 5 electrical & gas meters, 1 water meter.
Purchase price $375k
Currently fully rented at $3550
Monthly Expenses:
Prop. taxes $406 (1.3%)
Pool $110 (per seller)
Gas $75 (per seller)
Trash $102 (per seller)
Water/sewer $63 (per seller)
Electric $312 (per seller but this seems twice as high as other props)
Insurance $100 (my estimate)
Gardener $100 (my est)
Prop mgr $350 (my est)
Vacancy $350 (my est)
TOTAL EXPENSES: $1968
I'll put 25% down at 4% fixed for 5 years, amortized over 25 yrs.
P&I: $1484
The rents are pretty good but the expenses seem high however every multi-family I look at has high expenses. Pools are common in the area.
IF I can get it for $325k that would reduce the mortgage $200, prop tax by $50 and increase rents by $250 it looks much better.
What do you guys think? THANKS!!