[Calc Review] Did I mess up in my calculation?

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New to using the Rental Income calculator. Got all of my information on rent, taxes, utilities on Realtor.com listing. My cash flow and ROI seem high, not sure if I messed up somewhere with my numbers? Any help greatly appreciated!

Here is the link to the triplex:

https://www.realtor.com/realestateandhomes-detail/...

DJ Dawson · Answer

280k for a triplex in Sacramento seems like a very low price point.

Like mentioned above, I would add more to repairs, just a brief look at the property pictures it will cost at least 1000 to remove all that junk from the back yard. Investor special in general means sold as is so keep that in mind.

and hey at least that way after due dilligence you can say, nope I can pull back to my original numbers and say this is a damn good deal and I'm all over it.

Also I would have to side with the comment above. 4.25% on a multi family? unless thats already been guaranteed to you, I would anticipate getting higher interest than that.

Good luck man!

Chris Vail · Answer

@Kyle Marek are you familiar with the area that this house is in?  Are you familiar with the Sacramento Market?  your expense estimate is extremely low, but will also be determined on how you are planing to run this unit.  the Rental market is very hot right now, and I would be wondering what the previous owner did in the last year to warrant the 50,000 increase in price and why are they selling after a single year?  From the pictures the units look very run down so it will really be determined on what kind of tenant you are looking to attract.  2/1's in the area range from 900 - 1295 but the higher priced ones looked to have been recently remodeled completely, and based on this depending on the current leases and tenants I would aim at a lower gross rent income unless you are planing to put a lot more money into fix up.

Tobias Falzone · Answer

I'l bet the rental rates given are pro-forma, since one unit is described as 'move-in-ready'.  Repairs are going to be substantially higher than $1000. Just cleaning up the exterior property will be a few thousand, and if the other two active units require renovation then you are looking at a renovation budget of at least 10-20k each.  I would recommend viewing the property to get a better idea of repairs required to bring this property up to par.

Wes Blackwell · Answer

@Kyle Marek

You should also know that units 2 & 3 in that property DO NOT have a kitchen. So unless you plan on getting a permit for those and paying the cost to install them, kiss this project and your numbers goodbye :-)

And it's much more likely the fourth building is going to need to be torn down than it is likely to be easily converted to a fourth unit.

Brent Coombs · Answer

I reckon Charlene is closer to the mark: 5.5%! Also, I'm guessing you'd be required to pay it back in 15 years (not 30)!

ie. Investment mortgages are usually a lot different (ie. worse) than owner-occupier ones!...

Charlene McNamara · Answer

The interest rate you mention is for an owner occupied SFR. With any sort of conventional lending,  I'd be happy to get 5.5% right now for a non owner occupied multi.

Anthony Peric · Answer

@Kyle Marek listen to @Chris Vail. We both live in the area. The property is a decent price yes.  It is directly across the street from an industrial area. Also, this is a high crime ridden area as well. Several murders have occurred just north of this area. You should go visit the area and see for yourself. Don't rely on stats and vacancy rates. The area also doesn't have a major grocery store close by. I have sold 3 homes close to the area in the last year. So I have a good idea of that part of Arden and Del Paso Heights.

If you need some insight, feel free to shoot me a PM.

Kyle Marek · Answer

@DJ Dawson

Thanks DJ! Appreciate the input. Will look into your advice

Kyle Marek · Answer

@Chris Vail

Thanks for your input. I agree my expenses could be low from looking at the state of the propety. I just know rates in Sac are booming right now, but this area is not the greatest.

I did not look into the $50,000 increase, although I know how to find that info on the listing page. The rents are probably a little too high. I got them off of the property listing, but would probably be better to check with a PM company?

[Calc Review] Did I mess up in my calculation?

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