Can someone please double check my numbers??

1 Reply

So I just recently ran across three apartment buildings in a low income area not too far from where I live. I did a quick number crunch and it looks like it would have pretty good cash flow. Im pretty new to the investment world, so if someone wouldn't mind checking my numbers and tell me if I'm missing something, I would really appreciate it.

#1 - Asking price is 335k
7- units renting around 575/month
Property tax is 5000
Ball parking insurance at 100/month

#2 - asking 285k
7- units at 575
Property tax is 4000
Insurance at 100

#3 - asking 275k
6- units at 575
Property tax is 4000
Insurance at 100

$11,500 gross income
$4800 P&I (895k @ 5%)
$1085 for taxes
$300 insurance
$575 maintenance (5%)
$1150 vacancy loss (10%)
$920 property management (8%)

=$2670 Cash Flow/ month

Have you gotten an actual insurance quote? $100/mo seems low for a multi family building, unless your coverage amounts are low to the point of not being useful.

If it's in a low income area I would double your vacancy calculation as you will almost definitely have issues with that.

Same thing with your maintenance, are these buildings brand new? In a low income area your units are going to be beat up more, so I'd set aside at least 15% for maintenance.

Especially in lower income areas, plan for complete worst case and see if it still works, that way if it's not that bad, you still come out ahead, instead of the opposite.