I'm scheduled to look at this 4-plex later today. Asking price is $109,900 Price has been lowered to 99,000 My agent is now saying they have a couple of offers The units are in good condition and fully rented 22500 25% down if bought at 90K Loan rate 5% 30 yrs Monthly rental minus 10% vacancy $2070 Home owners 700 yr taxes 6300 yr monthly expenses $620 not including PM RENTAL INCOME 24840 YR Total expenses 18784 Total loan payments 4344 Cash flow $6056 Intrest expense $ 3375 Depreciation $2945 Total tax deduction $4080 Tax saved -612 Net after tax cash flow $5444 or $453 per month This is from an on-line Investment Property Calculator. I kept it as short as I could. These figures are at 15% discounted price Purchase Price $93415 Down payment $23,353 Loan rate 5% Term 30yrs Monthly rental less 10% $2070 Home owners 700 yr Taxes $6300 yr Monthly expenses $620 NO PM Rental Income 24840 Total Expenses 18952 Cash Flow $ 5888 Intrest Expense $ 3503 Depreciation $3057 Ins, tax, other expenses $14440 Total tax deduction $-3840 Tax saved $-576 After Tax cash flow $5312 or $442/mo. Taxes are high in NYS. There is a misc expense that is included in the figures at $ 4739 per/yr, for plumbing,painting furnace repairs( looks new) etc. Thoughts anyone that is into buy and hold? It's a tad over $100 per door. I know Brandon Turner likes to see $200 per door on a 4plex, that has been tough for me to find at this point. Does not need any rehab at this point all expenses includes debt service Does this look like a good deal? Thanks so much to everyone in advance.

Thanks Account Closed That is what I asked my agent to do last night, however I found out today that the owner took another offer. This was also my first offer from a investor point of view. I owned one 2 family years ago that I lived in, I sold it about 7, 8 years ago after having it for 15 yrs. So back to the drawing board, I feel like it was good experience doing that. I was looking forward to gettting my small business started. On to looking for the next 4plex. Thanks again!

Account Closed I hope you get a chance to respond to this, what price would you need to see this for it to work for an investor? The building though I have not had an inspection done, looks to be in "good" condition. Some of the $4735 cost is items like paint $200, book keeping $1230 for the year, snow/lawn/termites $560, not sure which one of those can't be all three. Supplies $1086 not sure if this will be needed yearly or what the supplies are, etc but I would need to find out all of those things before purchasing this building ( if I did at all) The seller now wants me to put in writing my best offer ( just found out today) So I'm coming to you for much needed advise, what if the building checks out and I can cut the cost of the 4735 in half? I won't do a PM just because it's only a 4plex all one bed rooms, 2 at $525 and 2 at $625. I don't have to buy the place however it is one of the better ones I have come across. The next thing I would try to do is split off the heat to each apt. My offer will not go above 90k Thanks Wendell.

Account Closed One more thing I notice, book keeping seems way out there at over $100 per month the year total is $1230, that's with a bonus that's crazy. He does not have a loan so he an do things like that.

Account Closed Thank you for showing me those figures. I have been over this many times, I never planned to use a PM because it did cut into the profit by $2300 per year with the after tax income around $7700 per year. At full rental, I also did the numbers with 10% less vacancy. Not any newly built homes in the tri city area I live in for this price range say 75-110k it's all older buildings. I tried to upload the sellers spread sheet but it didn't show. He has $100 for Comm/legal/insp not sure what this is really $678 ins $650 maint, what type I don't know yet $830 for repairs not sure what type $1086 for supplies not sure what $6688 Taxes/water/trash $1975/heat but's it's really $2335 or with the budget 200/per month $200 painting $793 plumbing furnace $200 Carpentry $20 Roof/Security/COAlarm also it' a slanted/slate roof $560 snow/lawn/Termites this can't be for all three $1230 Bookeeping/bonus not sure what the bonus is Well,Wendell you sure have given me a lot to think about, I haven't heard back yet and I thought I may be on my way to being a real estate investor, that is the reason it's not in my title because I'm not one yet. I believe the sellers totals come to $15410 for the year. I was thinking that the $4739 would not be that much every year but I do see what you mean it raised a flag with me also, and I do know it could be more sometimes. I wanted to find out what he was paying for if I had got the far in the deal. @Tuna Hirun I came up from 85k to 90k looking at then numbers as I did it looked like it would cash flow around $633 per month fully rented and no PM even at 95k which I would not offer. It's been a long time since I owned a 2 family and that was not from the perspective of a investor. Everything I've learned has been from the day I stumbled on to BP Thanks everyone who has responded to this post. This is hard because I really felt I did my due diligence.

put it under contract with due diligence contingency

Hey Henry! Awesome stuff thus far. I'm personally not a fan of all units being 1 bedrooms. If I do take on 1 bedrooms only, I usually look for a bigger cushion. So in my opinion, I would negotiate a lower price. Hope to see the next update from you!

What would you offer on this 4 Unit

Bill Jacobsen

Salem, OR · Member since 2013 · 701 posts · 159 votes

12y

By using your numbers and adding a few of my own I get and estimated NOI of $9,411. You can apply your own cap rate to those numbers to determine value. With your cost of money there is sufficient spread.

Good Luck.

Bill

What would you offer on this 4 Unit

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