I'm heading out to see our first two multifamily properties today with an agent and finally upgraded to Plus so I can use the calculator to analyze the deals, and a property that I thought would be great doesn't appear to actually work. I'm not entirely confident on the numbers I'm putting in, so I don't know if the property is a dud or if it's just me :)
2 Family Unit - 5 bed, 2 bath
Purchase Price: $169,000
Loan: $154,400 (FHA 3.5% down, 30 year fixed @ 4.1%)
Repair: $7500 (it was rehabbed in 2011, but I just figured we would need to prepare to do something)
Monthly Rent: $1,500 (we'd be living in one unit and renting out the other, but I should run the numbers assuming I won't be occupying, right?)
Electric: $0 (covered by the tenants)
The following monthly expenses are what I'm unclear on how to estimate:
Electric: $0 - covered by tenants
Mgmt: 10% (budgeting this even though we'll be onsite for the first couple of years, @BrandonTurner mentioned we should include it in expenses regardless)
When I run those, the monthly cashflow is -$173. Am I doing this wrong or does this property just not work? Any help would be appreciated!
At 3.5% down I would not expect to see good cash flow, but this is allowing you to get an investment property with less that 20% down. How long do you plan to live there and where do you foresee rents at that time? It might be a break-even after the depreciation, but not sure. Are you currently renting or buying? If you are currently renting, buying this may be better than renting somewhere else.
Join the Largest Real Estate Investing Community
Basic membership is free, forever.