Deal Analysis on a Fourplex - Advice Needed
Hi everyone, i need some advice on a D+ neighborhood. This fourplex is not in the best neighborhood and not in a war zone either. I drove by and spoke to a few neighbors and they said the neighborhood has issues like all other neighborhoods but nothing major such as; drive-by or shoot outs.
The property is fully rehabbed and the investor says 3/4 units are rented @ $550. He is asking $145K for the property but based on the area, i'm considering an offer of $100K because of the risk. He mentioned he is trying to liquidate this property so he can use the funds on another purchase. Based on the numbers, I was very conservative allotting for 10% each month for vacancies, repairs, capex and property management.
My question to you is, based on the below numbers and information, do you think it is a solid investment? Would you offer less or not offer at all?
Below numbers based on this purchase price: $100K
Quadplex: 2/1
Neighborhood: C-
Rent: $550 each @$2200 per month
Expenses:
- Vacancy: $220.00
- Repairs: $220.00
- CapEx: $220.00
- Management: $220.00
- Insurance: $100.00
- Property Taxes: $50.83
- P&I: $405.80
= $1436.63 (Total of Monthly Expenses)
Cash flow
=$763.36 (Cashflow per month)
Cap Rate
= 14.03 (Cap Rate)