I was wondering if I could get some advice on this 4 plex.
Seems like good cash flow and it has been recently renovated.
Thanks and I can find any other information needed.
Ok first things first, on the surface it passes the 1% test, plus the 50% rule. Now comes the real fun part, Due Diligence. You need to get in and see the property. If it passes there (it's rentable as is, or you can accurately determine a cost to make it rentable, and those numbers make sense) then you need to put it under contract. Once you have it under contract then you talk to the tenants and really figure what's going on. I might even hire a professional building inspector to look it over. At that point, if ALL of that is good, then you can call it a deal.
Never, never, never, never ever take a broker's word for anything. They are fantastic people (mostly), but they are involved in the transaction not committed to it. You are committed to it.
Statutory disclaimer: there is much more to this than the general outline above, so keep that in mind.
Thanks for your insight. I very much appreciate the time you took to respond.
I plan on going to look at the property soon.
All 4 units are currently being rented out. 3 @650.00 per month and one @$450.00 per month. There is also the potential of another unit. It is a garage in the back that has plumbing and electric already run to it. I'd have to see how much work/money would be needed to turn this into another unit to make sense.
The owners of the property need to move out of the country for their jobs so it could be a good opportunity to get it at an even better price.
Thanks once again!
Make sure you willing to walk away if this doesn't make sense. Try to negotiate a better price. It dropped 10k and the sellers are motivated. Also make sure you get a really good home inspection.
Do your due diligence about the rents. As far as building and extra unit in the back. See how much more money that may take the. How much rental increase that would provide. Sometimes it's better to save the money for the next deal.
Have you ran your numbers? What's the cap rate? Does it cash flow? Did you account for vacancy and maintenance and capital expenditures?
Hope this deal works out otherwise move on to the next one.