Did your expense numbers include property management? If you intend to do the work, that is fine, but if you want to run the numbers as if it were a business deal, include the cost of property management when analyzing the numbers.
What are the breakdown of the expenses?
@Kyle Shook - Checking your profile, I would suggest to spend more time on training and education. There isn't much details to comment on deal.
Also please remember what is a deal?
what you bring to the table to make sure it's not a deal for the next investor?
Are you accounting for vacancies, repairs, capital expenditures in those numbers? Those add up.
@Kyle Shook , I took some time to run the numbers on your property. Here are some of the assumptions I made:
- Commercial loan with 25% down @5.5% for 30 years.
- You'll need a commercial lender since this is a property with more than 4 units. I've heard many commercial lenders tend to prefer giving balloon loans (3-5 years) which is something you'll want to take into account. Since this is your first investment property, you're probably going to need to put a lot more than just 10% down.
- Vacancy: 8%
- Repairs and Maintenance: 10%
- CapEx: 10%
- Property Management: 10%
- Sales Expenses: 5.8%
- I also increased the taxes slightly to be more accurate for this area
As you can see below, the numbers don't work out well at all. I'd be curious to hear what others think of my analysis...
Overall, I think jumping into a 6 unit property as your very first investment would be like jumping into the deep end of the pool before learning how to swim on the shallow end. I personally recommend first going for a SFR or duplex to get the basics down and then go from there.
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