Hello BP members!

I have been eyeing some 4-plexes offered by a turnkey company in Dayton. 

Here is an example of one:

514 Wiltshire Blvd, Kettering OH 45419

Its 4 1bd/1ba rooms

I want to get everyone's opinion on how good a deal this is. I would be responsible for water, trash and yard maintenance. Turnkey company assessed this cost as 1800 a year. Is that too low? Here are the numbers I crunched. 

Purchase	$155,000.00
Rent	$2,100.00
Mortgage	$665.66
Taxes	$294.08
Insurance	$66.67
Vacancy (7%)	$147.00
Repairs/capex (10%)	$210.00
Prop Mg (12%)	$252.00
Maintenance	150
Total expenses	$1,785.41
Income w Mortgage	$314.59
Income wo/ Mortgage	$980.25
Cap Rate	7.59%
COC	11.33%
50% rule	$384.34

Note quite 100 a door, but appealing to me given the good school districts and location. 

How much did you figure for closing costs, loan down payment, interest rate, term?

I ran the numbers with 15% down at 4.5% and 2% of sale price for closing costs to match your $665 mortgage payment and I'm seeing 8.4% cash-on-cash with a monthly cashflow of $184 which is $46 per door.

I think the difference between your numbers and mine is you did not count the 1800 annual for utilities.  Let me know if I missed anything.  Do these numbers meet your objectives?  If so seems like it could work.  12% property management seems a bit high for multi-family, I usually see people talk about 7-10%

@Aamir Shah , it's not a "deal", if $155k is market value. 

Hint: look up what it sold for last time, recently. Is $155k more than market value? 

[Oh, I've done that for you: It didn't sell at $134k at the height of the selling season last Summer, but now they want $20k+ more, in Winter?]

That's not to say there's no money to be made. But, if others are getting more than $100/m per door, then why aren't you looking for that too, right? [But if you've been convinced by the location and schools, am I wasting my words?] 

I can't speak as to whether $1800/y is too low for water, trash and yard maintenance, but given who's telling the story, what do you think? Good luck...

I think $150 for water, sewer, trash and lawn maintenance is too low.

Property taxes have been raising the last couple of years and will again next year. Have you already accounted for this?

As mentioned before, at this price it’s not a great deal. You’ll look to be happy to break even with the slightest thing go wrong. 

There are better opportunities in the Dayton area. Maybe not the same great schools, but for apartments like this I feel schools are less important. You generally don’t rent 1 bedroom apartments to families with children.

Run or offer a LOT less money.

Way to many cash flowing deals in Dayton to get burned by this mess. 

I've seen this property sitting there for a few weeks. I haven't been able to get the numbers to work out for 155k either.

You guys are awesome thanks.

@Derek Kirkwood the math is based on a 20% down mortgage . The 1800 annual utilities are named poorly above (as maintenance). I did 12% prop management because there is a fee to place new tenants and that can really eat up profits (usually costs one month rent on top of the 8%)

@Brent Coombs good points. I have yet to find 100/m per door unless I am going to C-D areas, I guess I need to keep looking

@Tommy Spijkers also good points. When I buy homes in California I always consider school district - maybe I have to get out of this mind set. Do you know which areas in Dayton are good for rentals. I really just want low maintenance tenants who dont smash holes in my walls in anger over an eviction

@Nathan Rude yep I think there was a price drop also (used to be $160something)

I'm seeing "deals" put up by other investors on 4-plexes with an initial purchase of $33k and now it's offered on market for $120k. Someone is getting theirs! I know this post is older, but @Aamir Shah did you get the answers to your previous posts and how did you do in Dayton?

@Cheyne R Sexsmith I have bought 4 rentals in Michigan since then but I should probably hop back on the Dayton train and see if I can out-of-state BRRRR over there.

@Aamir Shah I'm looking to do the same. Good luck over there!

@Aamir Shah I am a member of the Dayton Real Estate investing Facebook group. They mentioned that there is a specific turn-key from Kansas that they have had many issues with in the past. You may want to do a thorough check of the property if it is from them.

A few things i noticed that could easily skew my numbers: 

1. In my area lenders use 5% as underwriting for vacancy. I used your 7%.

2. 12% management is also high for my area. We see 8% until you have several properties with the management company and this can get as low as 6%. I used your 12%. 

3. I do not know your effective tax rate. In Oregon we add 9% to our federal tax rate for income taxes. I used 34% for the effective tax rate. 

4. Also unknown to me is projected appreciation. I usually use 3%. 

Now as far as what the numbers say: 

This properties pretax cashflow is $3097 a year. Also known as a Cash-on-cash of 9.9%. Not bad!

After tax return and pay down on equity is 12.44% and after accounting for 3% annual appreciation in your first year total return would be $24.04% 

Disclaimer: This is not to be used as investment advice nor procure your purchase of this investment. Merely an example and run of YOUR numbers on MY software.