Potential First Multi Family Deal

[Account Closed]

Hello All,

I am 23 years old and I am on the fence about jumping into the world of real estate investing. I currently live at home with minimal expenses. I have a decent amount of money saved up and the only major expense I have is a car payment every month. Knowing all of this, here is my example:

I got pre approved for a home mortgage up to $100,000. I can put as little down as 5% (obviously I will be paying PMI monthly). The multi family I am analyzing is currently on Zillow for $99,900.

Home Price - $99,900

Estimated Closing Costs - $3,663.17

Estimated Initial Repairs - $3,000 (cushioned amount)

Total Loan Amount - $94,905

Total Cash Needed by me - $11,658.17

5% down payment

3.49% Interest

30 Year

Monthly Income (625 per side) - $1,250

Annual Taxes - $2,175

Total Monthly Mortgage and Tax - $652.45

Monthly Insurance - $50

Water/Sewer - $100

Vacancy Rate (8% of monthly gross) - $100

Repairs and Maint. (8% of monthly gross - $100

Monthly Cash Flow - $297.55

Gross Annual Income - $15,000

Annual P&I and Tax - $7,829.40

Annual Utilities/Insurance - $1,200

Annual Vacancy - $1,200

Annual Repair/Maint. - $1,200

Annual Cash Flow - $3,570.60

ROI - 3.27 Years

Please let me know your thought!! 

[Paul Kelly]

I will not address your numbers as that you can do the math and figure out if you are making money or not. The money made on any investment is not in the rentals, flip etc but more importantly on the purchase. Analyze the comps and see where this property lines up with the rest of the neighborhood. If working with a real estate agent they should be provided to you.

I envy you! At 23 and possibly purchasing your first property, that's awesome. 

Now that being said, if I find a property where It makes 1% of the sales price in monthly income it's sold all day long.