4-plex down the street.

4 Replies

Just wanted to do a sanity check on my numbers here. There is a 4-plex down the street from the duplex I live in right now. Here are the numbers:

Expenses
Vacancy (5%)-$105.00
Cap Ex (8%)-$168.00
Water (Based on living in the area)-$50.00
Management (Will self manage, but still included)-$168.00
Property Taxes (estimated from 2015)-$250.00
Repairs (8%)-$168.00
Electricity (Based on living in the area)-$200.00
Insurance (Overestimated based on first duplex)-$150.00
Principal and Interest (4% on 114k)-$544.25
Total-$1,803.25
Income (Based on area)
Unit #1: 2 bed 1 bath$800
Unit #2: 2 bed 1 bath$550.00
Unit #3: 1 bed 1 bath$450.00
Unit #4: 1 bed 1 bath$450.00
Garage (2 spaces)$100.00
Total$2,400.00

My plan is to offer a low-ball cash amount and then refinance after some repairs are done. ARV is anywhere from 170k to 190k. I think this is a no-brainer, but I wanted to get a second opinion.

Thanks!

Since the formatting didn't work on that first post, here it is again:

Expenses

Vacancy (5%)     -$105.00
Cap Ex (8%)     -$168.00
Water (Based on living in the area)     -$50.00
Management (Will self manage, but still included)     -$168.00
Property Taxes (estimated from 2015)     -$250.00
Repairs (8%)     -$168.00
Electricity (Based on living in the area)     -$200.00
Insurance (Overestimated based on first duplex)     -$150.00
Principal and Interest (4% on 114k)     -$544.25
Total-$1,803.25

Income (Based on area)Unit #1: 2 bed 1 bath$800
Unit #2: 2 bed 1 bath$550.00
Unit #3: 1 bed 1 bath$450.00
Unit #4: 1 bed 1 bath$450.00
Garage (2 spaces)$100.00
Total$2,400.00

Again, the only thing I'm not sure about is the P&I number because I want to go with a hard money lender to buy cash initially. 

Tim,

Southeast michigan. Those are just estimates, but I'd say they're fairly good. One of the 2/1's is a basement unit, the other 2/1 is much bigger. 

Pure numbers don't look bad....And maybe look at some details like property condition (so no major outlays early for capital projects), your home base makes me think college, so are these empty each summer or is there mass competition for students (which can be management challenges). Of course, also use rents on the conservative end and I would want to know in MI if the units are individually metered on heat (like my fourplex) or if I picked up the tab for heat for each unit. Also, have to know the local practice on 100 for the garage, and what if someone was not interested... so that income may be tough or a "bonus" for a one year lease to attract a good tenant...