Hello. Looking at my first multi- unit. Here how it breaks down.
3 units. Two bedroom- $475/ mo. 1 bed $400/mo. Efficiency $200/mo. Rent=$1075 Those are current rents. Efficiency and 2 bed have long term tenants currently occupied. 1 bed upper level is vacant.
Sent out early.... Sorry.
Cont. property qualifies for 2% rule. My calculated ROI 12.99%. Water and trash are paid by landlord. $129/mo. I could easily cash flow $100/ door.
Thoughts, concerns, advice?
On a quick look, cash flow looks pretty good.
What are the comps?
Who pays utilities (separately metered)? If it is you (the owner), need to update the projections.
Given the differences in unit specs, this doesn't sound like a typical triplex - is this a SFR which was converted into 3 units? If so, you would want to make sure that it is zoned/permitted appropriately.
On the surface it looks like it has potential. You need to consider utilities, management, vacancy, taxes, insurance, maintenance, capex. Also, hows the current condition? Does it need work as soon as you purchase or is it good to go.
Another thing to look at... Most banks that I deal with don't do loans for less than $50k, and since it is non owner occupied, I am assuming, you need 20-25% as a down payment. You may want to look at some creative ways to fund this should you choose the pursue this deal.
Water and Trash are paid by landlord. $129/mo. Taxes $1600/ yr. Insurance $1500/yr. Gas and electric are metered separately. Rent on these units is below that of comps in the area. I visited a couple banks today, yes 20-25 is required down and lending $35,000-38,000 is not an issue. @jessewaters what are some creative funding possibilities I should look into? Also how can I share a spread sheet with you all?
Sounds like a great deal to me! I would do it!
Yeah Jane it is not in the nicest neighborhood but it is not terrible. I would feel comfortable with the area. The tenants in place seem to be excellent. The property is clean and tenants seem to take a sense of pride in their home. AC are all window units.... Roof is new as of last year. I am not seeing any glaring issues. I may put some $$ into the vacant unit right away.
Thank for your feedback!!
You should totally run this property through the BP Rental Properties Calculator. If you're going to self manage, consider still putting 10% for property management (think of it as paying yourself that money every month to manage the property). Put 5% - 8% for vacancy. There might be long term tenants, but when they leave you'll incur expenses for fixing up the apartments and making minor/major repairs depending. It sounds like you're ok for capital expenditures, but if you want to be ultra conservative put in an additional $140 - $170 per month for capex.
I'd be interested to see how the numbers look on the BP calculator. Don't forget closing costs (probably $2 - $3k).
I'd buy it, looks pretty solid.
If it is zoned for a multi, I'll buy it.
I bought one just like this a few years ago. I had some challenges starting off with some neglected repairs and diy stuff that was poor quality work. However my purchase price was nearly the same.
I don't know your market etc etc, though I believe we are similar in what we would both own if you make this purchase. Today that property is one of my best properties as far as cash flow is concerned!!! I'm still updating the units a little at a time.
IF I WERE YOU, sounds like you've done your research already, I WOULD BUY THIS PROPERTY.
Obviously you need to make sure you do all the due diligence possible and check and recheck numbers before you say yes, but you have looked at multiple properties by now in varying conditions and you know this will make money. Make an offer!!
As far as creative financing goes, I had no money when I bought mine. So.... I did a lease option. 3 years, $8,000 down (borrowed from family), high payment of $1,000 per month, balloon payment after lease was up.
So I cleaned up the yard and did a little work here and there and saw the value of the property rise quickly. It's worth 85k or better now. Making that high payment might sound odd to some people, however I knew I didn't want to come up with a large down payment after 3 years for financing - so that payment created huge equity for me fast, and when I went to the bank I already had my 20% in equity thus no down payment required! Actually equity was more like 50%.
Other bonuses you've likely got going for you are tenants in place with appliances in the units and as you stated - a tidy property.
One thing you can do should you choose to be ok with this school of thought is to only insure the property for the debt against it. This is a rental, not primary residence. I do this with mine, all of them. Your $1,500 a year will become $400 and the debt against the property is covered by your policy. No you won't get full replacement value if it burns down, but it's a rental. If it is ever destroyed (not likely) then clear the lot and build new or clear the lot and sell it to a neighbor, then move on to the next deal.
I assume this property might be 100 years old if it's like mine. So check the big ticket items carefully and make sure they are at least functional at the moment. One area you will likely be able to reduce costs is with utilities - so check the attic insulation depth, if it's skimpy then blow in another 8 inches or so and rest assured you will cut the usage rates significantly.
If you want more details or info/pointers get my number off my profile and call or text.
Best of luck to ya Taylor!!
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