All
Members
Companies
Blog
Forums
Podcast
Webinars
    User Log in  /  Sign up
  • Forums
    Newest Posts Trending Discussions Followed Forums Real Estate News & Current Events General Landlording & Rental Properties Buying & Selling Real Estate Deal Analysis See All
  • Education

    Read

    BiggerPockets Blog BPInsights: Expert Analysis Guides Glossary Reviews Member Blogs

    Watch

    Webinars Video Library Financial Independence Blueprint Intro to Real Estate: Rentals

    Listen

    BiggerPockets Real Estate Podcast BiggerPockets Money Podcast BiggerPockets Business Podcast Real Estate Rookie Podcast Daily Podcast (Audio Blog)

    Topics

    Business Operations Finance Finding Deals Property Management Property Types Strategy
  • Network

    Recommended Vendors

    Real Estate Agents Mortgage Lenders Hard Money Lenders Insurance Contractors Investment Companies Build Your Team

    Search

    Members Events Jobs
  • Tools

    Calculators

    Rental Property Fix and Flip BRRRR Rehab Estimator
    Wholesaling Mortgage Payment 70% Rule Airbnb

    Services

    BPInsights: Property Insights Tenant Screening Property Management Lease Agreement Packages

    New Feature

    BPInsights (beta)

    Quickly analyze a property address or ZIP Code to compare your rent in your neighborhood.

    Analyze a property
  • Find Deals
    Real Estate Listings Find Foreclosures External Link Ads, Jobs, and Other
  • Bookstore

    Real Estate Books

    Profit Like The Pros Bidding to Buy See all books

    Featured Book

    BiggerPockets Wealth Magazine book cover
    BiggerPockets Wealth Magazine

    Written by financial journalists and data scientists, get 60+ pages of newsworthy content, expert-driven advice, and data-backed research written in a clear way to help you navigate your tough investment decisions in an ever-changing financial climate! Subscribe today and get the Oct/Nov issue delivered to your door!

    Get the Magazine
  • Pricing
Log In Sign up
User
Quick search links
Podcast Hard Money Lenders Books Washington
ForumsArrowReal Estate Deal Analysis and AdviceArrowFirst property starting with a 4Plex
  • Newest Posts
    • Newest Posts
    • Unanswered Discussions
  • Trending
    • Top Discussions
    • Trending Discussions
  • Browse Forums
Search Nova
Create post

First property starting with a 4Plex

28 Replies

  • Share on Facebook
  • Share on Twitter
  • Share on LinkedIn
Rotate Log in or sign up to reply
user profile avatar
  • Posts 12
  • Votes 6

Michael Rodriguez
from Bay Shore, New York

posted over 3 years ago
Hi All! I've beem researching the Rochester NY amd Buffalo NY markets for approximately a year now while listemimg to the podcasts (up to number 97) and educating myself as i go. im 27 years old and intend to retire by 35 through multi unit buy and hold investing and im starting with this property. looking for any and all feedback here! House is in Rochester The data (monthly where relevant): Neighborhood rating- C+/B- Purchase Price- $97,000 (30 year fixed @ 4.15%) 5% down plus closing costs (4850 +roughly 5000= 9850) PMI- $130 Taxes- $250 Water- $41 Insurance- $197 capex (very conservative)- $250 property mgmt - $150 Rental Income- $2,650 now in terms of vacancy, previous owner (friend of mine) has an agreement with a rehabilitation facility in the area that provides rent for a year as part of their treatment program. They are short on apartments for placement so they can keep my apartments filled at all times. Additionally- the capex is extremely conservative. it actually only requires 150/ month by my calculations based on how new most things are (replaced 2 years ago) but i added some extra buffer to be safe. how does this rate in terms of the deal? thanks in advance! -Mike
Rotate Log in or sign up to reply
user profile avatar
  • Posts 12
  • Votes 6

Michael Rodriguez
from Bay Shore, New York

replied over 3 years ago
please excuse- the PMI is actually around $60/ Mo.... NOT $130
Rotate Log in or sign up to reply
user profile avatar
  • Posts 20
  • Votes 7

Jennifer D.
from Houston, Texas

replied over 3 years ago

Hi Michael,
I’m originally from rochester, ny and wanted to know how the job market was there? Are there enough jobs to justify rental for a long period (passive income)? Also, from my personal perspective, the majority of those I knew from rochester have moved away either due to college, jobs, or just plain trying to leave. So, from your research, do you think there really is an opportunity there? If so, I’d like to know in order to consider investing there. My parents still live there and so I’m still occasionally visiting.

Thanks a bunch!

Rotate Log in or sign up to reply
user profile avatar
  • Posts 3.9K
  • Votes 4.4K

Jason D.
Rental Property Investor from St. Petersburg, Fl

replied over 3 years ago
Are you living in the property? If not, expect a down payment at 15% - 25% and possibly higher interest rate.
Rotate Log in or sign up to reply
user profile avatar
  • Posts 12
  • Votes 6

Michael Rodriguez
from Bay Shore, New York

replied over 3 years ago
I am not. AND i have a lender doing 5% down (i lknow thats unheard of)
Rotate Log in or sign up to reply
user profile avatar
  • Posts 12
  • Votes 6

Michael Rodriguez
from Bay Shore, New York

replied over 3 years ago
@Ben Leybovich this is the post
Rotate Log in or sign up to reply
user profile avatar
  • Posts 3.9K
  • Votes 4.4K

Jason D.
Rental Property Investor from St. Petersburg, Fl

replied over 3 years ago
@Michael Rodriguez if that's the case then that sounds like a great lender to build a relationship with! The property looks like a deal, based on the numbers.
Rotate Log in or sign up to reply
user profile avatar
  • Posts 22
  • Votes 9

Julien Walthour
from Rochester, New York

replied over 3 years ago

I️ can grant you access to the MLS if you would like To do some researching of your own

Rotate Log in or sign up to reply
user profile avatar
Check Rosette Top Subject:
Residential
  • Posts 4.4K
  • Votes 4.2K

Ben Leybovich
Rental Property Investor from Chandler/Lima, Arizona/OH

replied over 3 years ago

Hey, so the question you didn't answer (or even think of) is what will your exit look like?

In other words, will it appreciate in price? Why will it appreciate in price? prove it :)

Rotate Log in or sign up to reply
user profile avatar
  • Posts 12
  • Votes 6

Michael Rodriguez
from Bay Shore, New York

replied over 3 years ago

Great question, @Ben!

I'm not sure about appreciation to be honest. What I do know is that I've done researched comps amd the property is actually worth $115,000 currently. My long term plan is to hold this property While purchasing other properties and paying this one down early so we don't hit the 8 property limit. My goal is 20 properties totaling no less than 50 units in the next 7 and a 1/2 years. From there, I intend to either Use the equity that I have in properties for a portfolio alone on a larger multifamily purchase or development (25+units). My backup plan is to sell off some of the properties (lowest cashflowing) for money towards the down payment on the large multi.

My primary intentions are all cashflow based with tax writeoffs along the way.

Rotate Log in or sign up to reply
user profile avatar
  • Posts 24
  • Votes 17

Matt Finneseth
Accountant from Fargo, ND

replied over 3 years ago
Originally posted by @Michael Rodriguez :

Great question, @Ben!

While purchasing other properties and paying this one down early so we don't hit the 8 property limit.

What do you mean by "8 property limit"?

Rotate Log in or sign up to reply
user profile avatar
Check Rosette Top Subjects:
Rentals, Flipping, and Maintenance
  • Posts 3.0K
  • Votes 3.3K

Dan Heuschele
Investor from Poway, CA

replied over 3 years ago

I think it looks like a good investment if the area is not declining.   However, where did you get that cap expense estimate?   Typically I see only people that want to artificially show higher cash flow than what is likely reality with cap expense estimates that low.  4 units for $250 is $62.50/unit.   I show a kitchen at almost $50/month.  Maybe you meant $250 per unit which depending on size of the units, location, class of tenants, etc could be a good conservative value. 

My own spreadsheet that started with one originally provided by @Ben Leybovich shows that I can project $250/month per unit.  

Apartment buildings according to surveys can project with maintenance cap expenses near your numbers but they have a different volume. 

Still it looks likely to be a good purchase.  

Rotate Log in or sign up to reply
user profile avatar
  • Posts 12
  • Votes 6

Michael Rodriguez
from Bay Shore, New York

replied over 3 years ago
Originally posted by @Matt Finneseth :
Originally posted by @Michael Rodriguez:

Great question, @Ben!

While purchasing other properties and paying this one down early so we don't hit the 8 property limit.

What do you mean by "8 property limit"?

There is a cap @4 on the number of mortgages one can have at any given time. My fiance and i can each do 4 which allows us to get 8. This will amd can be offset by home equity loans and paying down mortgages early to free up a few.

Rotate Log in or sign up to reply
user profile avatar
Check Rosette Top Subjects:
Maintenance, Residential, and Flipping
  • Posts 285
  • Votes 142

Aqil Dharamsey
Investor from Rochester, New York

replied over 3 years ago

Hi @Michael Rodriguez and welcome to Rochester. I am guessing this is your first property. Where abouts did you purchase did? Wow 5% down!! That is truly unheard of. Anyway you can share the lenders information? Also who's managing these for you? Take care and good luck!

Rotate Log in or sign up to reply
user profile avatar
  • Posts 92
  • Votes 59

Jody Newman
from Honolulu, Hawaii

replied over 3 years ago
Originally posted by @Ben Leybovich :

Hey, so the question you didn't answer (or even think of) is what will your exit look like?

In other words, will it appreciate in price? Why will it appreciate in price? prove it :)

 Ben doesnt like Cheap *** properties.   They really dont make money.   LISTEN 2 BEN.

Hard to believe a B 4-plex property is under $100k but so be it!

Rotate Log in or sign up to reply
user profile avatar
  • Posts 12
  • Votes 6

Michael Rodriguez
from Bay Shore, New York

replied over 3 years ago
Originally posted by @Jody Newman :
Originally posted by @Ben Leybovich:

Hey, so the question you didn't answer (or even think of) is what will your exit look like?

In other words, will it appreciate in price? Why will it appreciate in price? prove it :)

 Ben doesnt like Cheap *** properties.   They really dont make money.   LISTEN 2 BEN.

Do you mean cheap as in purchase price, current condition, or low income neighborhoods?

It definitely is a lower price point neighborhood.

The neighborhood is working class. The price is a steal for the quality. AND much of it condition wise was replaced in 2015 dueto a fire. All windows amd floors amd the roof were replaced.

Please clarify 

Rotate Log in or sign up to reply
user profile avatar
  • Posts 20
  • Votes 7

Jennifer D.
from Houston, Texas

replied over 3 years ago

From what I understand, Rochester doesn’t really have new or old businesses there. After Kodak left, most that worked for them left. I’ve met several former Kodak chemists in Houston.

There seems to only be 2 employers there, wegmans and U of R. So what concerns me is that Rochester isn’t a growing market, at best it’ll stay stable. How are you planning on gaining long term? Rochester seems risky to me but you see opportunity, and I want to know what it is you see that I don’t?

Rotate Log in or sign up to reply
user profile avatar
Check Rosette Top Subjects:
Maintenance, Residential, and Flipping
  • Posts 285
  • Votes 142

Aqil Dharamsey
Investor from Rochester, New York

replied over 3 years ago

Hi @Jennifer D. Glad toy asked that question. You are correct most large employers have exited rochester Market. Being said that, this place is decent for cash flow. Because of low price point, the cap rates are generally in double digits. It's doesn't grow as much as Florida Texas etc but it's stable. This is a market you invest for mainly monthly passive income rather flipping for appreciation.

Rotate Log in or sign up to reply
user profile avatar
  • Posts 20
  • Votes 7

Jennifer D.
from Houston, Texas

replied over 3 years ago

hi @Aqil Dharamsey thanks for the clarification! 

Rotate Log in or sign up to reply
user profile avatar
  • Posts 26
  • Votes 12

L. Matthew Perry
Real Estate Investor from Plainfield, NJ

replied over 3 years ago

@Michael Rodriguez - Congrats on your first acquisition target and welcome to Rochester!  I have been investing in Rochester and Buffalo since 2008.  Couple things I wanted to point out regarding your monthly numbers:

- Your maintenance estimate seems a bit low.  I realize you consider the units in great condition since much of it was recently redone, but don't forget the tenant factor.  Given the neighborhood rating you provided, you may not always get the best class of tenant that will take care of the units. Keep in mind, if you take on any RHA or DSS tenants, you will absolutely have higher maintenance costs.

- Property Management Fees are usually 8-12% of rents.  So unless you are self managing or have a nice connection who is giving you a break, the $150 seems low to me.

- Water is tricky because tenants in multifamily units tend to be inefficient with the use of water.  And it's hard for an owner to control that or even know which tenant might be the culprit.  In my experience with my four families properties, the bill each quarter is between $150-$225.  

- I would suggest if possible, you keep the tenants on a month to month to gauge their performance before you commit long term even though the treatment center is paying the rent.  You just don't know the type of tenant you might get and it may make sense to have flexibility on when you can ask them to leave.

- When you calculate taxes, make sure you account for the change in assessed value which would impact your Monroe and City tax bill.  You can usually call the city and get an estimate on how much your taxes would change based on the purchase price since Rochester claims to assess at market value.

- You should also consider a vacancy rate in your analysis - usually 10%.  Keep in mind, even with the rehabilitation facility as a source of tenants, you'll need time in between tenants to make rent ready which means you aren't getting paid.

Overall from a cash on cash perspective, it seems like a good deal with room for the unexpected.  

Good luck and congrats again!  

PS - 5% on an investment property is a good deal.

PSS - You mentioned having a goal of 8 properties with 4 in your name and 4 in your fiancee's name. Keep in mind that once you get married some banks view you two as one and may limit your combined holdings. Consider putting a few in an LLC once they season. That way you can continue to buy in your name.

Rotate Log in or sign up to reply
user profile avatar
  • Posts 120
  • Votes 73

Chris Connery
Rental Property Investor from Cherry Hill, NJ

replied over 3 years ago

@Aqil Dharamsey @Jennifer D.

Paychex is a fortune 1000 company headquartered in Rochester. 

Rotate Log in or sign up to reply
user profile avatar
Check Rosette Top Subjects:
Maintenance, Residential, and Flipping
  • Posts 285
  • Votes 142

Aqil Dharamsey
Investor from Rochester, New York

replied over 3 years ago

Thanks @Chris Connery for pointing that out. Although paychex is still based in rochester majority of the big players are gone such as Kodak, Bausch and lomb, etc.
the largest employer is probably U of R.

Rotate Log in or sign up to reply
user profile avatar
  • Posts 120
  • Votes 73

Chris Connery
Rental Property Investor from Cherry Hill, NJ

replied over 3 years ago

You're right. My point was it's definitely not a bleak situation in Rochester, IMO. Which I'm sure you already know.

Rotate Log in or sign up to reply
user profile avatar
Check Rosette Top Subjects:
Team and Off Market Deals
  • Posts 1.1K
  • Votes 917

Ray Lai
Investor / Vendor from San Diego, CA

replied over 3 years ago

@Michael Rodriguez

Make sure you have some good insurance since these are people in rehab. You know what happens when someone fails during rehab? They get back into drugs and copper is something that people strip from buildings to sell for cash to buy drugs with.

The numbers look good because your endeavor is a high risk endeavor. Make sure you know why your 'friend' is selling because when numbers are TGTBT, more analysis is required.

If everything is correct and you add in at a minimum a 5% vacancy rate (10% to be conservative), then cool. Also, your Capex for a place that has 4 seasons seems awfully low for a multi fam even if most of the stuff is only 2 years old.

Rotate Log in or sign up to reply
user profile avatar
  • Posts 55
  • Votes 21

Thaddeus D.
Investor from New York, NY

replied over 3 years ago

What’s the specific neighborhood this is in?

Rotate Log in or sign up to reply
  • 1
  • 2
Related Resources Real Estate Deal Analysis and Advice
The 2% Rule: Fact, Fiction, or Feasible? (Updated 2021)
Is That Neighborhood Up-and-Coming? Here’s How to Tell
Do Your Due Diligence Before Digging Up Dirt: Investing in Vacant Land 101
Best Deal Ever: How a Postcard Gets the Phone Ringing
Meet the Investors: I Sold My Wife on House Hacking With a PowerPoint (& Soon We’ll Live for Free!) Featuring Joaquín Camarasa
Resources Read, see, and learn more!
Link Real Estate Investment Calculators
Link BiggerPockets Blog
Link Path to Purchase
Link Mortgage Loans
Link Find a Contractor
Link Real Estate Agents
Link Hard Money Lenders
Link Real Estate Listings

Top Contributors

Collin Lee Johnson
Collin Lee Johnson
Mankato Minnesota
7.43
Score
Joe Villeneuve
Joe Villeneuve
Plymouth, MI
7.05
Score
Joshua Dorkin
Joshua Dorkin
Denver, CO
6.43
Score
Peter M.
Peter M.
DFW, TX
6.1
Score
Brian Burke
Brian Burke
Santa Rosa, CA
4.33
Score

Real Estate Deal Analysis and Advice Trending Discussions

  • Which mortgage should I pay down first?
    7 Replies
  • "Subject to" Deal Analysis in Stone Mountain Georgia
    3 Replies
  • We are newbies. Please we need some help analyzing this deal.
    2 Replies
  • Market research practice
    1 Replies
  • Sick of me yet? 423 Byron St
    0 Replies
Log in Sign up

Log in

Forgot password?

If you signed up for BiggerPockets via Facebook, you can log in with just one click!

Log in with Facebook

Or
btn_google_dark_normal_ios Created with Sketch. Continue with Google

Let's get started

We just need a few details to get you set up and ready to go!

Use your real name

Use at least 8 characters. Using a phrase of random words (like: paper Dog team blue) is secure and easy to remember.

By signing up, you indicate that you agree to the BiggerPockets Terms & Conditions.

Or
btn_google_dark_normal_ios Created with Sketch. Continue with Google

Why create an account?

Receive a free digital download of The Ultimate Beginner's Guide to Real Estate Investing.

Connect with 1,000,000+ real estate investors!

Find local real estate meetups and events in your area.

Start analyzing real estate properties, we do the math for you.

It's free!

Explore

  • Membership
  • Community
  • Education
  • Marketplace
  • Tools
  • FilePlace
  • REI Resources
  • Perks
  • Glossary
  • Reviews
  • iOS App
  • Android App

Company

  • About Us
  • Press
  • Advertising
  • Careers
  • Stats
  • Contact Us

Important

  • Editorial Guidelines
  • Terms of Use
  • Rules
  • Privacy
  • FAQ

Social

  • Facebook
  • Twitter
  • YouTube
  • Instagram
© 2004-2021 BiggerPockets, LLC. All Rights Reserved.