First Multifamily Purchase! Good deal or bad?
Hello All-
So I have an 8 unit under contract in Olympia, WA. I would put the address / purchase price on here, but I believe that may not be legal since I haven't closed yet? Anyways, zip code is 98503.
Information is as follows:
- Total monthly income : $5545
- Five units at $725 / month
- Two units at $675 / month
- One unit at $595 / month
- All units are 2 bed / 1 bath @800 square feet each
- Coin operated laundry (income from this is not included because it was not provided)
- Consists of two 4-units on one parcel
- Ann Tax: $4100
- Wtr/swr/grb: $5256
- Insurance: $2896
- 25% down payment with ~4.5% IR
- Assumptions: 5% vacancy, 10% for maintenance, 5% for Capex, 10% management fee. I am going to be managing the property, but I like to assume a management fee for safe measure.
Why the property spikes my interest: Rents in the area for a 2/1 are $850-900. From what I have gathered, the current owners aren't managing the property well and that's why the rents are so low (they done speak English so its hard to communicate). With a little work I can easily increase rents to market value.
My main concern: Property is on septic. From what I have gathered, the whole neighborhood is. I am not seeing any sewer covers in the road.
Would anyone recommend this for the BRRR strategy? Thoughts / recommendations? This being my first multifamily deal, I am finding myself questioning my thinking.
Thanks in advance,
Hans