Would You Buy This Deal??
Hello Everyone,
I have been a long time reader and listener to the BiggerPockets Pod cast and forum post and have greatly enjoyed all of them. I am hoping today, the BiggerPocket community of knowledgeable investors can provide me with their advice on these two four-plexes I am under contract for purchase, and scheduled to close on Oct 1. They are off market. Please let me know if these numbers work, or if there is concern in this deal.
The property is in a B class neighborhood and both units built in the 1983. A few months ago, Hurricane Harvey hit Corpus Christi and caused minimal damage. This past May, the HOA replaced the roof and is currently also replacing the siding to the outside.
Both four plex's are identical so for this breakdown, lets focus on the first four plex. The first plex are all two bedrooms and two bath. Total square foot is 4,831. Each plex is selling for $245,000, so a total of $490,000. Other comps in the area are listing for $274,000 to $295,000. On August 13, 2018, another four plex, two miles away closed for $299,000.
I have obtained a conventional 30 year loan for 20% down, for each plex, at an interest rate of 6.5%. The seller has agreed to give 1% for closing for each plex.
Debt Service: The monthly mortgage will be $2118.01 (each plex) - Taxes and HOA included (HOA is 580 month which includes fire, wind, casualty insurance, exterior maintenance, outside plumbing repairs, & roof).
Gross Rent: $3,680 - currently two units are renting at $890, and $950. The second plex has slightly higher rents of $1,000 for two units and $950 for the other two.
Expenses: Management fee: 10% -$368, water: $375 average.
NOI: $819 month \ $9828 annual.
I have spoken with the property manager who provided the last two years of P&Ls which shows he has had little turn over and quickly rents out the units. Currently, 7 of the 8 units are rented out.
A little about me. I have a government job in Arizona and will be relocating out of the country soon. These two four plex's are located in Corpus Christi, TX. I have bought and sold rentals here in Tucson, Arizona, and quickly realized property management here in Tucson isn't the same as those that I have used in the past. I hope that these run themselves with the cash flow it is generating; including my debt service and expenses.
I have a little bit of a concern because I will only have $800 dollars per unit each month for the unknown. Would you all close this deal or walk?
Let me know your thoughts and concerns...And thank you all!!