Dothan, AL. 8-unit deal. Need extra eyes/opinions.
I am close to getting an 8-unit in Dothan, AL under contract for $160,000. Seller will allow me to put 20,000 down and I'll have 1-year to pay off the 140,000 at 6% interest only (700 a month for the interest only payment). What do you think of this deal?
Estimated repairs: $40,000 and I like to include a fudge factor $8,000 for $48,000 in all.
Each unit is 2 bed 1 bath and 1000 sq ft.
3 out of 8 units are occupied with two probable evictions. Current rent is $425 and I believe market rent is $500.
Utilities are separately metered for water and electric.
HVAC units are 10 - 12 years old. Roof less than 5 years old. Property is about 30 years old.
C class neighborhood.
Analysis once I get it stabilized:
Rent: 4000 (8 units renting 500 each)
Property Taxes: 150
Insurance: 120 (based on it insuring it at 200,000)
Trash: 80. I am probably way off on this one. Would you go for one or two dumpsters on an 8-unit? I will call trash company tomorrow.
Property Management 10%: 400
Vacancy 8%: 320
CapEx 5%: 200
Maintenance/Repairs 10%: 400
Principal+Interest (after refinance of 20 yrs at 6% for 210,000): 1500
NET NET Cashflow of 4000 - 3170 = $830 for about $100 a door.
I estimate I will have about 5 - 10k left into the deal when all is said and done so I should theoretically have most of all my cash back out of the deal in a year after the refinance.
Thoughts? See anything I'm missing or have terribly miscalculated in your opinion? Thanks in advance for the help!