First deal-10 units-three duplexes and a 4-plex

[Scott Jeannerett]

Hello BP!!

I am currently working on my first deal and I'd LOVE to hear some feedback.  It's 10 units, three duplexes and one quad with a total income of $6k/mo.  The purchase price is $410k, taxes and ins. will be approx. $1k/mo.  We've checked with every bank we can and every one is different.  Different down payments, interest rates, amortization schedules, and terms.  Depending on who we go with we are looking at a note between $2000-$2300 dollars, give or take.  My question is, what are we not thinking of?  We have figured 10% for vacancy, even though they are never empty, 10% for management, even though we plan on managing them ourselves.  Another $4800 per year in misc. expenses and 15% for income taxes on the property.  We've already decided that we are going to make a mistake somewhere, and that's ok.  Just wondering what some of you guys think.

Thanks!!

[Alex Brookbank]

@Scott Jeannerett With a purchase price of 410k and gross rents at 6k month .... you should be okay even if you make a mistake. The cash flow should be able to cover you. That doesn't mean you aren't over-paying in a working class area, I don't know. But in simple terms of expenses and cash flow, you have a bit of a safety margin. Also: I've learned that buying/selling properties makes tenants very anxious. If a "borderline" seemingly sketchy tenant is willing to leave the property when you take ownership, and you think you can get a higher rent. Do it in a nano-second.