Need help Analyze on potential first property
Hi BP,
I want to purchase this rental multifamily property because the number work out pretty well, at least for Southern California area, but I am not sure if I analyze it correctly. Can someone help or advise if this is a good purchase
I use BP calculator and here is the number on it.
The property is 3 units,
A: 2 beds 1 bath, and a small den => rent for about $1350
B: 1 bed 1 bath => rent for about $1000
C: A studio with 1 bath, no kitchen => $650
Total Gain = 3000 Total Expense = 2600
The house is on MLS for 535K, but it was sold on July for 335K. It was basically a flip, and the flipper wants 200k for his work. He didn't add any units. He did repaint everything and did the flooring, and fix the roof. I am not sure what he did with the interior of the house.
Everything is remodeled, and ready to move in, if I offer 485K then I would make around $400 dollars a month, I do have 5% vacancy, and 10% cap-ex, 5% maintenance, which yield 5% CoCROI. Interest rate is around 3.5 to 3.8.
My concern is that the room is not that big, all the units are small houses. The studio has no kitchen so might be hard to rent. This area is not very industrialize, the house was build in 1944, and the neighbors is more like B to C tenants.
And I have a feeling 200k for a flip is too much to ask for, but I don't know if he fix anything inside the house.