Is this a dream or a nightmare?

[Joe Ellis]

So here is a deal I was just looking at, wanted to see what others thought and see how my numbers compare to others.

5-unit building Separate Electric/Gas/Heat

Price- 439,900

Taxes-5,094

Gross rent-4,175

I figured on 30% down @ 4.5% and no immediate repairs since the building is fully occupied.

Mortgage- 1,557.04

Insurance- 100

Taxes-424.50

Vacancy-334

Maintainence/Repairs-208.75

Prop Management-334(although i will be self managing for now)

Trash/Sewer/Water-300

Monthly cashflow-916.71

Let me know what you all think and since this would be my first deal, anything I may be overlooking or undercompensating could be a life saver.

[Ryan Murdock]

What condition are the units in? Will they all require a $5k overhaul after each current tenant leaves? Your repair cost may be $0 on Day 1 but if all the units turnover in the next year that's $25k out of pocket. I'm guessing the situation is not that severe but it could be.

How about a CapEx number? You'll need to account for some big ticket items down the road. And unless it's a brand new building some of the systems (roof, HVAC, etc) are part way through their useful life so that will need to be factored in. Example: If you're 17 years into a 20 year roof you'll need to have the means to seed that reserve fund so you'll have adequate funds to replace the roof in 3 more years.