I am currently looking at a triplex with a detached garage apt. It is in the Spring, TX area just north of Houston. It is a B to B+ property and neighborhood. Some room for forced value and appreciation. It is currently owner occupied, with 2 units rented long term, and 1 unit used for AirBNB, I would not continue doing AirBNB. I would NOT owner occupy it. It is currently set up for owner paid utilities. Shared laundry between all 4 units. I would be purchasing this with a partner who is fronting the down payment. Long term plan would be to refi out in 6-9 years in one manner or another and repay my partner plus 5%.
Purchase Price: $335,000
Loan: 30 Fixed at 4.875, 25% down
Rents: $4,300 (conservative but reasonable)
Utility Bill Back: $200 (Should increase at release for the current tenets)
Utilities: $7,000 (Based off their actuals plus some fluff)
Vacancy: 10% (Somewhat a shot in the dark, I can't find any good data for the area)
Taxes: $7,700 (Current tax rate times the purchase price)
Cash flow with PM: $450.94 per month
Cash flow no PM: $815.44 per month
It is on a well and septic. From a previous contract they had the septic inspected and the inspector said they needed a larger system. The current owner said they have had no issues, and have only had the tank pumped once while owning it in 3 years. Both my agent and I feel she is trustworthy. Granted everyone is biased towards themselves. It also has about 3-4 years left in the roof. My cash flow is planning on replacing the roof immediately with a standing seam.
Am I missing anything? What do y'all think? It seems like a pretty good deal, though not perfect.
Updated over 1 year ago
Insurance is $2550 annually.
A couple things to think about:
- Do your projections include the cost of insurance?
- Have you factored in closing costs?
- Are the numbers you stated for repairs and capex the annual numbers or the initial costs when you acquire the property?
@Michael McKay Whoops! Yes they do factor in the cost of insurance. Somehow I forgot to put that on my post. I will edit that.
2. Yes, closing costs are factored in.
3. The $5,600 is an annual accrual. I do have the cost of a new roof, and other minor things factored in. Considering that into my cash flow to pay that interest back, I would personally be cash flowing $350 with myself managing.
What about lawn care expense? Who is responsible for lawn care?
@Jay Helms It is covered under utilities.
Any othr feedback?
@Ray Johnson I would be self managing. The current tenants are long term. What would you consider to be good numbers?
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