Need Help Analyzing this 4 Unit

[Joe Santos]

Hello BP,

I crunched the numbers on this 4 unit that I'm looking at and just wondering if I got it right.

A little background on the property:

C Class property in Dayton OH, by a well-known hospital

Listed at 150000, owner willing to finance with 20% down at 7% interest for 5 years then balloon payment

The place is fully occupied with long term tenants

Here are the numbers

Total monthly rent:     2150 + 200 (coin operated laundry)

Total monthly income:     2350

Expenses

Mortgage: 798.39

Taxes: 190.77

Insurance: 100

Electricity (for the laundry, tenants pay their own with separate meters): 85

Water/Sewer/Garbage: 110

Vacancy, Repairs, CapEx, Property manager @ 10% of rent each : 215 x 4 = 860

Total Expenses: 2144.13

Cash flow: 205.78

I did do the numbers on a much conservative side. Any feedback would be awesome.

Thank you for your time!

[Greg Scott]

Joe:

It does look like your expenses are conservative.  I think some are light but others are heavy so on the average it appears conservative.

I have two questions that you may want to consider:

• Why owner financing?   Sometimes owners do this because the property will not qualify for bank financing.    It could be it has major code violations or other defects.  Alternatively, some owners provide financing so they can so they can get an above-market sales price.  There may not be any problems here but it is worth investigating.
• What is your target return?   At $300/mo cash flow, this property is giving you a 12% Cash-on-cash return.  ($3,600/$30,000).  That is definitely on the low side.  Because you are not from the area and also have exchange rate risk to consider, I would be looking for higher returns.