Multi family in Southern California
I was hoping the BP community can give me advice on this deal!
Here are the terms
Selling price 1,000,000 on 4 plex
4 units all 2bed1bath
Rent is 1500/unit for 3 units
one unit is at 1400(so a little room to raise rates) market
rent rate ranges 1600-1400 for these types of units.
Cap rate 4.5%
35% down
Positive case flow if I do my own property management at $500/mo and assuming a 3% vacancy,1%capex,1%maintenance.
ROI 1.4% this is socal and everything is expensive
Building built in 1950
The property is currently fully rented with long term tenets. The vacancy rate might be lower but I assumed 3%. And if/when I take over there maybe some turnover.
I might be able to raise the rent a little bit but I don't want to loose long term tenets. The property has a good chance to appreciate over time however the building was build in the 1950s. I would assume my capex maybe higher in the future
I have 375k in capital. I'm looking at this 4 plex in a well to do socal city but the property is a low end property. Low end in this neighborhood can be low to middle class in other socal locations. I'm a buy and hold investor but I'm shifting toward a more mixed portfolio possibly buy hold and sell or refi after some appreciation. I want to scale up for 20years and do not want to miss out on other deals. My main goal is to make passive income for retirement 20yrs from now. I have a full time job at a corporation. It would be nice to get out of corp and do this full time because I enjoy REI so much more.
Hesitation:
I don't know if this is a good deal after seeing what other investors are getting in other states with less capital up from with a high ROI. I want to buy this multi family because I live in socal but buying this will tie up a lot of my capital. It seems like a stable investment but should invest out of state where the ROI is higher? What are your thoughts? Take the deal,save and then buy the next?