My First Multi-Family
Hey guys, I'm working on my first multi-family investment, and I'm hoping you all might have some advice. I am currently renting an apartment with a lease that expires at the end of January, so I'm in a bit of a time crunch, especially with the holidays, trying to find a deal.
I came across a near-fully remodeled duplex here in Orlando, 2/1 on each side, total of 1390 sqft. It was recently renovated: (plumbing, electrical, appliances, kitchen/bath). I couldn't see the roof as it was flat, but it was not indicated as having been replaced.The property is lacking privacy fencing and is covered by trees that are in need of some major trimming or removal ($10k+ to remove the big guys).
I'm planning to owner occupy this property for at least a year, but for investment purposes, I'm looking at it from the perspective of me not living in it (I think this is fair).
I expect I can rent each unit out for $875. Rentometer confirms. Electric is metered separately, and water is not. I figured I'd charge a flat rate of $25/per unit for water to offset this.
Asking price is $190,000. I plan to do FHA 3.5% or Conventional 5% down. My bank quoted me an interest rate of 3.8%, however my mortgage broker quoted me a rate of 4.75% on the conventional. I was told this higher rate includes some lender credits to reduce my cash at close and to compensate the mortgage broker. I expect with the conventional loan my payment will be $937 (I think this includes PMI of $200). I was still told I would need around $14k cash to close.
So here are the numbers I am working with:
Income: Rent $1.750
Expenses: Pmt $937 - Taxes $135 - Insurance $100 (don't know where to get this number) Vacancy $140 - Repairs $87.50, CapEx 87.50
TOTAL Expenses : $1,487
This leaves me with $263 (not factoring in property management).
Am I missing something? Do my numbers fall short somewhere? I plan to write my offer with contingency on the roof inspection showing it has 5+ years of usable life left. Once I determine the highest price I can pay for this property (hopefully with some help from here) I plan for my first offer to be 8% less than that price to leave negotiation room. I will likely offer close to $170-175k. Anything else I should be doing?