Help me analyze this deal - triplex, turning one unit into STR
This property has three units, a 3/2 and two 1/1's. Current rents are 1100, 735, and 725. I'm planning to turn at least one of the 1/1's into a vacation rental which should earn at least 1200/mo (very conservative estimate, probably higher).
Purchase price: 295,000
Down payment: 25%, $73,750
Loan term: 30 years
Interest rate: 5.375%
P&I: $1238.94/mo
Closing costs: $2800
Gross scheduled income: currently $2650/mo, I'm planning on $3000/mo minimum with STR, so $36,000/year
Less Vacancy/Repairs: 10% = $3600*
Gross Operating Income: $32,400
Less taxes ($4700 (high estimate)), Insurance ($900), and Water/Sewer ($1800): $7400
Net Operating Income: $25,000
Less Debt Service: $14,867
Before Tax Cash Flow: $10,133
CAP rate: 8.47%
COC: 13.24%
*yes, I know that's low for Vacancy/Repairs/CapEx, thats because we do our own work and management. All three units are occupied with leases running to next summer. That's when I'll turn one or two into STRs.
Property is ideally located for tourism, walking distance to historic sites, a large park, several museums, public transit, and walkable to the downtown business district.
Thanks!