Upstate, NY Deal

[Greg Borowiec]

Hey Guys, I have been dabbling with the thought of getting into real estate investments and after running across BP it pushed be over the edge to do it.

Here is a deal I came across but wanted to get your thoughts on it.  It would be an investment property.

This is a 4-plex unit (1 Bungalow with 3 unit in the back).  Basically 2 buildings on one deed/property.  It looks like it was recently renovated and each unit is currently rented out.

They are asking for $265K, which seems a bit high and was going to offer $238.5K or possibly less.

20% Down: $47,700

Rental Income: $3,650/Month

Mortgage: $918/Month

50% Expense Rule: $1,825/month (I know the taxes are about $340/month)

With that I believe I can have a monthly cash flow of at least $900 and $10,800/year.  This gives me roughly a cash on cash return of 23%

Is there anything I am missing or overlooking?  

[Joel Owens]

If landlord pays water go 60% costs. Recently renovated is my favorite "barf" word. So is " currently 95% occupied ".

On recently renovated look at if they put real money into the place or just prettied it up. For example carpet and paint with new countertops. What about water heater, a/c, electrical, plumbing, etc.? How old is the building? Certain vintages which give you a host of problems.

Are these 4 units legal and permitted?? Are they grandfathers in and then you buy and can't use them based on intended use and you overpay for the property??

What sellers love to do is buy a property and say recently renovated and quote a current high occupancy ( means nothing ). What is key is if you have tenant history for years that shows stability of the asset to produce returns over time. Make sure you are not in a rent control area or dealing with section 8etc. as they have certain protections in court that might cause longer than expected evictions.