I had a walkthrough on this property this week and am crunching the numbers based on what I saw. I am thinking of offering closer to 200,000 (listed at 299,000).
Roof will need replaced within the next few years.
Unit D is occupied by a person who is incarcerated, moderate damage in unit. Will request that owners do not renew tenant's lease (which is up in September) and return unit to 'rent ready' condition likely using deposit money. If purchased, I will be living in unit D.
Two units rent for 630, the other two for 615. 3 of 4 units are up for a raise in rent this year, but based on area $650 is around the max for a 2 bedroom in that condition.
Long term tenants in units A, B, and C.
Full septic system inspection and well water testing will have to be done in addition to inspection and appraisal for financing.
Running the numbers at purchase price 200,000, raising rent in all four to $650 per month, and spending 30,000 on repairs gets a monthly cash flow of $353.74 and an ROI of 10.61 (once moving out and self-managing).
Please let me know if you need any additional information, or if I missed anything. Every bit of input helps!
*This link comes directly from our calculators, based on information input by the member who posted.
I think you've done quite a good job accounting for your expenses, going a little high on cap ex and repairs (which I like), and including your well and common area electric.
Now, for the big problem which you've already alluded to. The purchase price. At $300k, there's just no way, and even at $200k it's slim at best. You are looking at less than $100/door and if you decide to hand off the reigns to a property manager, you can kiss most, if not all of your cash flow goodbye. I'd prefer to have much more breathing room in a deal like that, though cash flow can be expected to be somewhat low with only putting 3.5% down. I'd like to think though that you'll be able to find a better deal than this in the near future. Best of luck with your pursuit!
@Brandon Roof Thank you for your input! I’ve been analyzing a lot in my area and most are way off from cash flowing. Right now I’m between making low offers (that probably won’t get accepted) and finding a mentor in my area to share their knowledge.
$100 a door with management is the goal, getting closer every day!
I don't think you need a mentor. That is simply the fact in many markets right now you can't find a property that meets the common benchmarks we strive for.
The question for us becomes whether or not we are willing to accept less than optimal returns or if we remain disciplined to strike only deals that check all the boxes, even when it seems that they don't exist.