Found a good one

[Sean H.]

Property is listed for $44,000. 5 units, 2 / 1. 4 units currently rented, (430x3, 400x1).

the 5th unit needs slight rehab. it needs a kitchen sink, kitchen cabinets, some areas painted, 2 interior doors, laminate flooring replaced in bathroom, new toilet, new bathroom vanity, new shower door. roof repair. total costs estimated around 5k.

once all 5 units are rented, the annual income, less 8.3% vacancy, will be: $19140

annual expenses are as follows:

insurance: $804
taxes: $1620
utilities: $3420
PM: $2000
allotment for maintence/repairs: $1200

mortgage: $284 per month, $3404 / year

annual cash flow: $5,692. ($474 / month)

everything looks good, what am I missing??

[Rich Weese]

Sean,
Please be very careful and do more due diligence before you leap.

1. Do you actually have a mgmt company that is willing to manage on % of rent.
2. Just HOW LOW income is the area?
3. If the owner is telling you it is a "little more intensive", what he probably means is he isn't sleeping and wants out.
4.Re- read your definition of "slight rehab". Huh? Floors, doors, cabinets, paint, sinks, painting, roof, etc. That is not slight rehab , imo.

I wouldn't trust the sellers' word and I'd really want to research the mgrs' thoughts. Rich