My first possible deal --- Please help me evaluate this 4 plex

[Peter B]

Hell Evereyone,

So here is my first possible deal.

It's a newly built 4-plex (2007).

Each unit is 3 bed 2 bath. In excellent condition.

Each is renting for 1020 currently. It is located in a small up and coming suberb of Dallas. Great schools and amenities.

Asking is 375,000. Was on the market for 420 last year but didn't sell.

Here are the numbers I have so far(this would be bought using cash:

0%
Purchase Price: $375,000.00
Down Payment $-
Closing Costs $9,375.00
Loan Costs $-
(-) 2% Seller $7,500.00
Initial Investment $1,875.00

All Figure Are Annual
Rental Income $48,960.00
Less Vacancy $2,448.00
Gross Rental Income $46,512.00

Operating Expenses
Real Estate Taxes $9,972.00
Property Insurance $2,000.00
Property Management $2,558.16
Repairs & Maintenance $1,000.00
HOA $-
Utilities
G&E $300.00
Trash $1,116.00
Water $-
P.I.D. Fee $-
Yard Care $2,700.00
Mortgage Insurance $-
Accounting $100.00
Advertising $60.00

Misc. $350.00
Total Operating Expenses $20,156.16

Net Operating Income $26,355.84
Annual Debt Service

Cash Flow Before Taxes $26,355.84

Please let me know what your thoughts are. If you would like more info please feel free to ask.

Thank you very much!

[Uwe S.]

Hello Peter,

I would take min 10% CAP rate for my investments, so if I take your calculation, price of this property should be not more than $265,000.

Now I know, someone says location, location for an investment, I have an other point of view. If you really have $375k you can buy in some other areas 20 units or more, with better cash flow like this propertie. But you pays your money and you takes your chances.

For me its a no go flag.

-Uwe