Updated about 10 years ago on . Most recent reply
Closing on my first fourplex in May!
Thanks to all of the advice here I am closing on my first fourplex in May. Two duplexes with two bedrooms each connected by a carport, each duplex ~1100 square feet. Two of the units have basements which would be ideal for a future bedroom installation once I put in egress windows.
List price $225,000, purchase price $200,000
Monthly rent income ~$2500.
During my initial walkthrough the realtor showed me the two nicest units and said that he couldn't get in to the other two. So I made an offer and it was accepted. I then went in for the property inspetion and the other two units were much worse (!) but mostly cosmetic damage. I increased my fix-up budget from $10000 to $20000 (hopefully a very conservative estimate but the numbers were still pretty good even at the higher amount) and managed to finagle about $5000 for repairs (two federal pacific breaker boxes need to be replaced and some roof work).
All of the units are currently rented but... after I sealed the deal I was told that two renters are leaving at the end of May. It happens to be the two units that need the most work so it's not all bad as it will give me a chance to do some fix up work.
So I do feel that there was a bit of obfuscation here but the numbers still work pretty good for me to get a 12% ROI. I budgeted 10% for PM, 7% for vacancy (based on the PM saying his vacancy rate was 5%), and 15% for maintenance/capital expenditures.