6-unit in the Youngstown, OH area

4 Replies

I'm looking at a 6-unit down the street from my parents' house. The current owner have had it since the 50's and are tired of managing it as they are both in their 90's. They've left half the unit vacant simply because they didn't want to deal with a fully-occupied building. They're motivated and have received one low-ball owner-financed offer that they are considering.

5 units are 2 br/1 ba and 1 unit is an efficiency. Asking $180k. Current rents at $1,950. We're told it's in mint condition, but we're estimating $5k as we'd like to install coin-operated laundry (hookups are already there) at the very least. I'm estimating we can get rents + laundry income up to $3,220/month.

 

Operating expenses include water ($480/month), insurance ($150/month), trash ($60/month), and property tax ($256). We'd like to offer asking price at 6% amortized over 30 years with a balloon at 5 years. Estimating CapEx and property management at 10% each and vacancy and repairs at 5% each. But if my math is right, post-tax cashflow is only $33/unit, and I'd want at least $100 ($50 for the efficiency). Is there a way to turn this into a deal? TIA!

Updated over 2 years ago

3.5% down

Not sure what the laws are in Ohio about billing back water to the tenants but if it is possible that would bring your cash flow to above 100 per door

So I sat down and started reading @Brandon Turner 's book on creative investing and about 3 pages in, I realized I am approaching this entirely wrong. I'm not offering asking; it's not a deal at the asking price. I still appreciate any feedback you guys have, of course. Just wanted to inform you all that I've seen the light. Or some light. A few rays, at least.

Tenants pay water if it's on separate meters.

You can't charge them what they didn't use - you just include some water into Rent, like $30/mo or $50.

$100/mo included in Rent will scare off the Tenants - you can't charge rent more than market Rent is...but you can bill them water/sewer if there are meters for each unit