4 Unit Analysis

6 Replies

I am looking at purchasing my second property.

I am a buy and hold investor. I buy with as little down as possible and try to pay off in 15 years, and I don't collect a dime until the property is paid off. I'm 29 years old, time is on my side.

The 2% rule doesn't apply in my area.

I currently have a 4 unit building in Southern NH. This second property is less than a mile away from the first, it is also 4 units.

I went to see it for the first time yesterday, it has some challenges which I have little experience with.

Asking price is 315k,
rents are 3,250/mo.

It was built in 1970 and has not been updated since. I would purchase it, I am making an offer today at 270k, @ 5% down payment (FHA). I'll put about 20k of work into it. (New windows, some new doors, new flooring, refurbish kitchens, paint paint paint, update some bathrooms, landscaping, update parking lot.)

After the work, I will increase rents. Two units are two story townhouses, I should be able to get 1000 (maybe 1100). One unit is a nice little one bedroom I should be able to get 900 for. The last unit is an odd two bedroom that has a strange design, I could get 800, maybe 900. I am getting these numbers from my current building where I have nice units.

If I got financing for 300k and used that to do the renovations (purchasing for 280k) my monthly PITI would be $2,403. Here's the link to the mortgage calculator.

http://www.mlcalc.com/#mortgage-300000-5-30-5.0-7500-1500-0.52-4-2014-month

After expenses, at current rents, I would make about 6k/yr.
After raising rents, I'll be around 14k/yr.

I am concerned this will not pan out as I am planning. The last building I bought only needed one of the units to be flipped, this building needs everything flipped and would necessitate a contractor.

Thank you for your thoughts.

Maybe I'm wrong but I'm nearly certain I know exactly what property you are talking about based on the asking and rent roll numbers. I valued that property at 236k tops. I think that deal is thin. Duplexes, triplexes, and four families in Derry and neighboring towns are drastically over priced. Just look at what you would be paying per square foot.

I'm not trying to talk you out of the property, I'm between properties and debating what to do next, ie I'm not shopping. I just urge you to look at the price your paying per sq ft then look at your price per sq ft for a decent starter type single family. Now if you see what I'm seeing in those numbers ask yourself, why would you pay a premium? Yeah you've got convenience for having all your tenants under one roof but for me when I look at the valuations people are putting on multi families right now I just scratch my head.

Let me know if I'm way off on the sq ft prediction. Best of luck no matter what my friend.d

hey at the very least those sq ft numbers can help your negotiation. Give'em hell Ian.

Hey your in Hampstead? Me too. Let's meet at beantowne for a coffee.

Brett, how far are you from Portland (ME). I'm also a young investor looking to get things going and would love to meet up and share some ideas. Let me know. Tom

Ian, how far are you from Portland (ME). I'm also a young investor looking to get things going and would love to meet up and share some ideas. Let me know.

Sorry about the double post, not sure what happened there

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