I'm currently working on my first 4-unit property in Ohio. It's a 1960s all brick residential parcel in a neighborhood full of similar units and in a shook district rated 5/10. Two new residential developments ($125-200k properties) of single family homes have went up on either side of this small neighborhood.
Gross Rent: $1800/mo
My question is if anyone else has had a similar experience dealing with 4-plexes that rent from $400-500 like these and what your experience has been with the type of tenants you have been able to get.
It depends on how many bedrooms each unit has. If those are 1 bedrooms, generally good experience. If those are 3 bedrooms, not so much.
Second consideration, is exact location. Even in Fairborn, there is a large difference from one area to another. Dayton even more so.
Give me a shout if you want to talk specifics.
In general, I have found the rent price-point of $450-$500/mo to be a very transient and higher headache tenant hub. Your area may be completely different, if that price is the broad norm. Are the leases in place longer-term? People here that only pay that amount don't look at their place as a home, really. Hopefully your area is different. The numbers look great by the way. Congrats!
50% rule probably isn't going to work for you here, just be aware.
You're at about 15% for taxes, 10% for utilities, add in 5% for insurance and 10% for Property Management and you're at 40% of your income already without vacancy, repairs, CAPEX, lawn care and snow removal, tenant placement fees, or anything else.
As mentioned, lower prices tend to turn over faster (I try to avoid 1 bedroom units for this same reason, rent fast but move often) and can be harder on units... 1 months security deposit often doesn't go far either in terms of damage to a unit and making it rent ready again. Now those are HUGE stereotypes so there are exceptions but something to think about.
I own probably a very similar building in Kettering and my experience has been overwhelmingly positive. Long term tennants, 0 vacancy, rent is the same as your prospective building. It could be a good buy if in a nice location. The price on yours is about what the ones near mine that are in good condition and fully occupied sell for. One just sold for 140, too much, but the guy who bought it has been doing this for a while so that puzzled me.
Some of the buildings further down the street from mine are a different story, closer to the main road, and gas paid by landlord. I wouldn't want one of those.
Stay away. Gross Potential of $1,800 ($450/door) is going to be a C- Class nightmare to manage. Or, pay $50k in which case it may be worth it to do that work:)
You must be a BiggerPockets member to post on the forums
Join the world's largest, most open Real Estate Investing Community online, 100% free forever!