Octoplex in nice neighborhood
I am interested in an 8 plex that is literally a stones throw across a major road from the nicest area in my town (approx 300,000 population). this area takes a step down in "class", but of course no MF exists on the other side of the road. It is one of the best rental spots close to these nice areas that isn't on campus.
It is not the nicest looking from the outside (2 story - motel looking style 8 plex). But is in a good area. SFR's on the street go for about 175K+. SQFT per unit is 610 and they are all one bedroom. currently 100% occupancy, owner says they rent easy, currently rented for $550 per. 5 of the units still owner paid electricity but owner is and has been converting those to tenant paid as the leases roll over. I think this is because there is a fairly new owner. According to PVA property was last sold Jan '09 for $285,000 - seems a bit suspicious that he just got in and wants out so quick. Prior to that it was sold in 1997 for $160,000.
Listing price $305,000
Gross rents per month $4,400
Mortgage @ 7.5% assuming $0 down payment and paying full ask price = $2,132 per month payment (As you can tell by the terms I am assuming worst case scenarios to be conservative).
So it meets the 50% - barely - and does not meet the 2%.
I don't think expenses will be that high, building looks to be in good shape - not alot of deffered maintenance, relatively low taxes in my area, etc.
I am expecting a small amount of cash flow, and some price appreciation over time - looking for a long term buy and hold.
What do you guys think?