Houston area deal analysis

[Nathan Piercy]

Hi BP - I'm looking at making my first deal and would like some feedback.  Here is what I've got:

A large home turned quadriplex with additional commercial warehouse (warehouse includes living space). Home recently re-roofed and remodeled in 2017. Asking price is $329k

Total Rent Income (per month): $3850

Expenses (per month):

Taxes - $485

Insurance - $85

Water/Sewer: $250

Garbage - $50

Lawn - $150

Vacancy - $192.50

Repairs - $385

Capex - $385

Prop. Mgt - $385

Electricity/Gas - payed by tenants

HOA - none

I've been pre-approved for a loan at 4%. 

Thanks for the help - hoping to make my first purchase soon if the numbers work!

[Rajiv Patel]

@Nathan Piercy When I lived in LA, my apartment charged me a flat monthly rate for water/sewer/trash on top of my rent. When signing my lease, I understood that I was charged the same rate as all the residents regardless of my usage. This practice varies market to market. Essentially you would charge a flat rate each month which could help you cover, if not all the cost, but at least partial cost of these utilities. I have heard on BP podcasts of investors doing this as well as a strategy to cut their costs in the event the property they own is not metered separately.  

When analyzing a property you want to be able to see where you can either increase your income and/or cut expenditures to boost your bottom line. Ideally you would want your units to be metered separately, but in cases that it is not, trying to recoup some of the cost by charging the tenant will help your numbers. Another idea is to increase the rents which could help cover the cost of the utilities you are paying out of your own pocket.