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Updated about 10 years ago on . Most recent reply

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27
Posts
1
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Corey Hajduk
  • Homeowner
  • Howell, MI
1
Votes |
27
Posts

First Multi-family purchase. Very rough numbers but so far looks promising. Any opinons or suggestions

Corey Hajduk
  • Homeowner
  • Howell, MI
Posted

I just raised enough capital for my first Multi-family purchase and have been looking for a couple months now for a good buy. I'm looking in several different areas in Michigan. The areas I'm primarily focused on are Livingston County, Kalamazoo, Ann-Arbor, Ypsilanti and Lansing. I would like to buy several units and have all of them within the same area making management easy. I think I finally found one that's worth taking to the next stage and contacting the seller's agent to set up a walk through, here are the quick rough numbers….

Purchase Price: $129,000

Down: $25,980 (20%) 

Payment/Month: $775 ($9300) 

Closing costs: $1249 

Management costs: $298 ($3570) 

Expenses: $298 ($3570) 

Average Rent/Unit: $745

Total First Year Expenses: $43681 

Total First Year Income: $35760

The building is a 4-Unit, 2 bed 1 bath per unit, that appears to be in average shape and the description claims to have a "clean and updated interior" but no interior pictures are posted online. It is also in a good neighborhood of Kalamazoo, 5-10min from WMU campus. 

What do you all think? Worth it to take up to the next level? Like I said 100% rookie here so everything helps. Thanks

Most Popular Reply

User Stats

72
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10
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Josiah Swartz
  • Kalamazoo, MI
10
Votes |
72
Posts
Josiah Swartz
  • Kalamazoo, MI
Replied

Presumably the 2nd year ROI would be much more attractive. Without the closing costs and down payment, these numbers show about $16,000 in expenses, which would be great cash flow.

I don't know where this is, but I'm skeptical that a 2/1 is renting out for $745. There are a lot of decent-sized homes in Kalamazoo that can't bring in that much per month. My duplex in the Westwood neighborhood (5 mins from WMU) is $715 for 2/1 and about 1000 sq ft.

Make sure you ask a couple of management companies and local Realtors about the potential rent.

As I found with a lot of the multi-family opportunities, any landlord-paid expenses will demolish most of your cash flow. Are each of the units metered separately for gas, electric, and water/sewer? How does the trash bill work out?

In any case, if you're a 100% rookie, contacting the seller's agent and taking a look is a great choice. If nothing else, you'll gain experience with the process. Don't get emotionally involved and be skeptical of any numbers you're given second-hand. 

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