If all your numbers are accurate (gas, etc) to current, it looks ok. Not huge cashflow, but there is cashflow there and available.
With the units "recently updated", why such high repair costs? Is there something major needed, lots of little things or just planning for worst case?
I used actual numbers provided by the seller that gonback to January 2017. The list price is $150k but there’s no way it’s gonna sell for that.
I've got a few observations / questions:
- WATER: $100/month for water with 4 units seems a little low. Do you have utility bills or just the seller's stated expenses?
- STUDENT HOUSING? You mention its near the college. Do you foresee it being used by students? If so you may want to budget accordingly for a little more than average on turnover expenses between tenants.
- PROPERTY MGMT: On property management you've got 10%. Does that account for lease up fees and other incidental charges throughout the year? Depending on your PM company, that could mean an additional 1 month's rent for a lease-up fee, or a portiono thereof for renewals. Depending on the fees your PM charges, it could easily add up to more like 15-18%.
Expenses based on seller stated. Could possibly be student housing, so that’s good to know. Based PM costs on Brandon Turner’s webinars primarily. I don’t think it’s professionally managed now.
@Dale Matheny - I would look to verify some of the seller numbers, things that jump out at me:
1. Water/Sewer Bill - for a 4 plex this seems pretty low, I pay more than that for duplexes in the Cleveland area
2. Vacancy/Property Management - does this factor in the management costs for renting the unit? if this is student housing you may deal with a higher turn over rate which can increase costs & also have longer vacancy periods... I did a quick zillow search on the address & a number of the rentals in the area have been on the market for >30 days.
3. Utilities - Noticed that you're paying electric - is that right or are the units individually metered?
Hope this helps, this area is pretty rural so hopefully it works out for you.
@David Bardwell , tagging me is a great way to give feedback. I'll let the developers know. Thank you.
Always consider 10% vacancy, it is typical while calculating the cap rate.
Good luck. No deal is better than bad deal !!!