Just getting into the game here in Chicago (graduated about a year ago and moved to the city shortly after).
So now after getting a better feel for the various neighborhoods around the city, I'm looking to make the jump into the small multifamily (2-4 unit) market. I've started to run some numbers and am just hoping all you crazy knowledgable people could give me a quick check.
The property I was looking at is actually under contract, so it doesn't look like I'll have a chance this time around, but I know deals come around all the time.
Anyway, to the numbers:
2 flat (each unit is a 2/1)
Purchase Price: $225,000.00
Down Payment -- 22,500 (10%)
Purchase Closing Costs: $5,000
Estimated Repair Costs: $5,000
Monthly income - $2400 (according to rentometer, each unit should probabyl rent for aroudn $1200)
Vacancy - $120.00 (5%)
CapEx - $240.00 (10%)
Sewage - $10.00
Management - $240.00 (10%)
Property Taxes - $379.33
Repairs - $240.00 (10%)
Water - $10
Garbage - $10
P&I - $966.77
Total - $2,216.10
Income to Expense Ratio (2% rule) - 1.02%
TOTAL MONTHLY CASHFLOW -- $183.90
CASH ON CASH ROI -- 6.79%
So, obviously not the 10% or more cash on cash that some deals are on here. Is this just a mediocre deal or are some of my numbers obviously way off? Any feedback is greatly appreciated. I've attached the report from the BP rental property calculator as well.
Links to the listing:
BP Calculator Results -- http://www.docdroid.net/file/view/12pt3/kimball.pd...
Thanks in advance!
Couple of things when running your numbers.
- Sewage and water are on the same bill and is about $60 a month per building
- Garbage is included in your tax bill if it is under 4 units
- You forgot insurance - I use $1500/yr for 2-4 units
Also, just some advice. Use Redfin.com instead of zillow/trulia/realtor.com it is much more user friendly and like realtor.com it has direct MLS access (trulia and zillow do not and can be inaccurate)
Thanks @Brie Schmidt, all good things to keep in mind for the future!
Are you planning to live in this building? If not I would not use 10% down, more typically 25% for investment properties.
Also, if just rehabbed (and done reasonably well), you may not need to use 10% for both repairs and Capex. I would investigate what mechanical systems were replaced, the roof, foundation, etc. before plugging in a CapEx number.
@Bill Bockwoldt :
Good things to keep in mind, thanks. I don't plan on this being a live-in for right now, but depending on the numbers for the various properties I'm seeing, I might have to adjust that plan.
You're right, the capex and repair numbers should probably warrant a closer look.
Thanks for the tips!