4 Plex in Richmond, VA

[Milton Leland]

Hi There!

I am a new member, but have been following the boards for quite a while.

I own a few SFH Townhomes, and am looking to get into Multifamily. There is a 4plex available in Richmond VA that I am analyzing. I don't know enough to know what I don't know, but wanted to use this as a learning experience to see if the numbers look right.

Four Plex in Downtown Richmond Church Hill

Asking price: $298k 

2/1 with utilities paid for by tenant - washer / dryer hookups in each unit.

Currently has two 1 yr leases and 2 month to months

Area is a bit on the rough side, but is up and coming (this property is a bit rough, but the ones around it have been fixed up)

Been on the market since 2014 at various prices.

Rent for the area should be $600-700 for each of the apartments, and it is CLAIMED that the annual rent is currently $30,600.

I guess my questions would be 1. What are the average expenses on a building like this? It is an older home, but has had rehab in the 80's. 2. From all the analysis I have done based on other posts, it would seem to not be a great deal, but I still want to work the numbers, just so I know a good deal when one comes up.

Any help is MASSIVELY appreciated.

Thanks! 

[Trevor Ewen]

@Milton Leland

I think @Ned Carey and @Sean Ploskina have the right idea. If you're lying awake dreaming about the property or think you can talk the owner down, here are some things I would check out based on what I have learned with our property in Richmond:

1) Check for clay pipes in the house or in the sewer line. These are an imminent replacement issue. If you know beforehand, and can be confident about it, you may be able to knock 20-30k off the asking. A knowledgeable owner will know they'll eventually have to deal with the repair, and may prefer you taking it off their hands (you still have to budget for it). You will still have to handle these, but ideally at a lower price than you take off.

2) Look into the tenant history and see if there are problem tenants and units. Bring this up as something you can take off the owner's hands, if there happens to be one. They may try to hide this info, but if they keep records, you may be able to read between the lines.

3) Do an inspection, tally up the expenses. Double them, take that off your offer and let them look at the rationale and estimate.

As an experienced landlord, you may already be in the process with these suggestions. But I think it's not a bad negotiating tool with older houses in Church Hill. 

Also, I may add that Church Hill has seemed a bit overpriced to me. Primarily because it has really gentrified into a desirable owner occupant neighborhood. You may be able to do better deal-wise in nearby Chestnut Hill / Highland Park.