3 Plex in Florida: What do you think?

3 Replies

Good day BP family,

I actually should have been brainstorming with the BP family. A little about my goals and journey. I am a newbie but not at heart. I have been looking into small multifamily with plans for trading up to bigger mid size properties. However, we all have to start somewhere. I am super motivated and passionate about the business. I plan on investing in multifamily for cashflow where I can add value and hold long term. I have met, talked, and worked with a lot of people. I have even analyzed and toured a lot of deals but have not found anything that fit with my criteria. I plan on doing all the ground work myself regarding any upkeep and managing. Ive been on the grind for about 3 years and actively looking for about a year. I search the MLS and send out direct mail. This particular property came up the other day and below are the details. Any feedback will be great.

3 plex:

Location is in Port Orange, Florida

its a single family 2/1 with a duplex in the back that has a 1/1 and a efficiency unit.

2/1: $850

1/1: $600

Eff: $435

Total= $1,885/ month

Income $22,620/ year (assuming everything runs smooth)

List price is $169,000 but may be some wiggle room for about $155-160k.

Expenses are claiming 25% annually

Insurance= $1,500

Water= $2,400

Tax= $1700

total= $5,600

However thats not even including management, maintenance & repairs, or cap ex. But lets entertain it.

I plan on living in one of the units and renting out the others. So I will be putting down 3.5% down. Debt service would be at about $9,886.

Based on the expenses provided it would be a great deal but having the conservative approach, being that its a small multi lets assume 40% for expenses.

Income- $22,620

Expenses- $9,048

NOI= $13572

Debt Service- $9886

CashFlow= $3686/ year, $307.17/ month, $102.39/ unit

Any feedback will be helpful!

Best Regards,

Rico

@Rico S. - good intel. what are your goals/criteria to acquire an asset? By that I mean, does this one fit them?

By the way, your missing two important expenses in your post: vacancy & lawncare. 

Hopefully this ebook will help: https://www.biggerpockets.com/files/user/jayhelms/file/10-step-guide-to-buying-and-holding-a-small-multi-family-rental-property 

Hmmmm, I'm not an expert so please understand I'm just expressing an opinion or maybe trying to help by asking more questions. Personally, I like 3-4 plex as income producing properties. A few things I asked reading your post is how old is the property?, does it have tenants in it?, are you including as income rent you are charging yourself?, and how much cash or OPM do you have for repairs/improvements after you buy it?, what is the ARV? What are the area comps both rental and sales?

If you live in one of your units you have cut what you expect as income. If you plan to do that it is okay but remember to run your numbers with that scenario.

Brandon has said many times the first property you buy won't make you financially rich... it's the education and confidence that will lead you to the next deal and the next deal and the next deal... that will. Because of that I would encourage you to run the numbers as accurately as possible, be honest with your goals, and if the property seems to align with your goals...GO FOR IT!

@Rico S.

Hey man. So I think the biggest part that you need to consider is that if you are planning to live in one of the units that will reduce your income on the property drastically. Depending on the unit you live in, anywhere from 5-10k a year less than you’re projecting. So re-run the numbers with that in mind because it makes a huge difference.  Best of luck!