Riverside Rental Property Analyzsis (Triplex)

9 Replies

Looking at this property in Riverside and here is my analysis. 

8377 Cypress Av Riverside 92503

Lets say I purchase 400,000 

The actual rent on it right now is: 550 + 1100 + 750 = 2400

Expenses (monthly)

Repairs: 50

Taxes 366

Insurance: 100

CapEX: 100

Total Expenses: 616

Loan

20% down, 320000 loan

30years @ 4.3% 

Mortgage: 1139

Cashflow: 2400 - 1139 - 616 = 200 monthly Cashflow 

ROI: 2.61%

Just looking for some feedback on this calculation, it looks like it isn't that great of a deal since ROI is only 2.6% but it does cashflow, so it can't be too bad.

Thoughts? Would that be an acceptable ROI being in the Southern California with the market as it is.

Would you invest in this property if you could get a purchase price? 

(If you are going to pursue it, take me with you! Just want to learn the process)

Thanks in advance everyone! 

Updated about 3 years ago

Looking at this property in Riverside and here is my analysis. 8377 Cypress Av Riverside 92503 Lets say I purchase 400,000 The actual rent on it right now is: 550 + 1100 + 750 = 2400 Expenses (monthly) Repairs: 50 Taxes 366 Insurance: 100 CapEX: 100 Total Expenses: 616 Loan 20% down, 320000 loan 30years @ 4.3% Mortgage: 1583* (Typo) Cashflow: 2400 - 1583* - 616 = 200 monthly Cashflow ROI: 2.61% Just looking for some feedback on this calculation, it looks like it isn't that great of a deal since ROI is only 2.6% but it does cashflow, so it can't be too bad. Thoughts? Would that be an acceptable ROI being in the Southern California with the market as it is. Would you invest in this property if you could get a purchase price? (If you are going to pursue it, take me with you! Just want to learn the process) Thanks in advance everyone!

just looked into this property I believe you may be able to purchase this particular property for less than $400,000 I pullled some info on this place property it appears to be off market , are you working with an agent ? 

@Peter Bui I think you need to recheck your mortgage numbers and I would anticipate additional capex and repairs in this type of product and age of the triplex. Once you do that I think you'll find a different bottom line. 

@Rob Moran Sorry that was a typo. Mortgage is actually around 1583 but cash flow still ends up being around 200. Hmm but if i were to add additional capex and repair rates then that would still change that. Thanks for the advice!!

Hi @Rob Moran Hmm, seems like that is where I would need help with. What is a normal interest rate for investment properties in Southern California? OR what would be a safe number to put down on my analysis? 4.87%?

Thanks! 

@Peter Bui So I did a quick analysis on the deal through the financial model I built and this doesn't look like a good deal at all even with missing expenses that you can see from the below charts. The last two charts indicate the purchase price ($160k) that makes the most since, but again it looks like there are some expenses missing so I would be careful with this deal. I personally invest in apartement complexes and the problem with these smaller deals is the economy of scales and only having 3 units bringing in all your income and what if 1 of the 3 units happens to go vacant (trust me this will happen), then your cashflow could potentially be wiped out for the entire year. Not trying to discourage you from these type of deals, just want you to be mindful of the challenges you could face coming from my experience and the many investors I personally know.

Assumptions

Downpayment: 20%

Closing Costs: 3%

Amortization: 30 yrs

Int Rate: 4.3%

Materials: 8% (plug)

Maintenance: 8% (plug)

Capex: 10% (plug)

Makes sense: Purchase Price @ $160k

* I hope this helps and makes sense. This is a sample and part of the full analysis that I do when preparing executive summaries for raising private money, so if you need more detail than what's provided just let me know. Please let me know if I can be of any additional assistance or if you have another deal I can help you analyze! The BP community has tremendously helped ignite building my portfolio so I love giving back. Best of Luck!