Under construction 4 plex

9 Replies

Hi all,

I am super tempted to invest in a under construction 4plex.  It will be completed in 100-120 days after booking (10k refundable reservation).  Each unit is 3 bed/2 bath.

Price:  450K < price includes granite counter tops, all appliances, sod in backyard, front yard

Rent: 1200/unit (4800 total) CMA

PITI: 3000 per month (PI: 1700, Tax:1050, Insurance: 250: yes taxes are super high)

Prop Management: 400/month

Maintenance/Capex: 400/month

Vacancy:  250/ month (5%)

Cash on Cash: 8%

First year maintenance is fully covered since its brand new

I know that the cash on cash is low but I also think that it might not need 400$/month to maintain at least for first 5-6 years.  

I am super tempted to invest in this over cheaper properties (50K a pop).  Cheaper properties have higher returns but not so sure about appreciation.  I think the area has potential to appreciate in value.  

Torn between the dilemma whether to go for a nicer, low maintenance property with lower returns or cheaper with higher returns.

Account Closed - What is the area like? Is it in a good school district? Will it attract higher end tenants? If all answers are yes - it may not be a bad option for you. Taxes are REALLY high tho.

yeah. it depends on its location and your risk tolerance. 8% COC for a new construction in a nice area is pretty good. do you use leverage ?

Thanks!  The schools are descent.  Rated 7 on greatschools.com.  I would say its a B+ neighborhood, not an A.  But the surrounding area is getting developed pretty quickly with high end amenities.  

Taxes are almost 3% :(

Can you possible live in one of the units IOT secure better financing?

@Emma Chen :

 Yes.  I will put 25% downpayment about 110k.  Since its a 4 unit I will get conventional loan @ 4.625%

Originally posted by Account Closed:

Can you possible live in one of the units IOT secure better financing?

 Unfortunately no.  its an out of state deal for me.  Thats why I have to get a property manager.

Thats another reason I was leaning towards this deal as its low maintenance + the payments are done online via direct deposit against manual collection for the 50k properties I looked at (B- C neighborhood).

Account Closed - I just saw the post where you stated that you are getting 4.6%. That isn't bad at all for an investment property. Can I ask who you are going through for that rate?

Originally posted by Account Closed - I just saw the post where you stated that you are getting 4.6%. That isn't bad at all for an investment property. Can I ask who you are going through for that rate?

Bank of america, conventional mortgage. 4.25% for SFH (investment) and 4.625 for multifamily (investment). This is not a verbal quote but at actual based on paperwork.

Great - thanks for that!

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