Hey everyone! I'm new to the BP community and this is my first post analyzing a potential deal.
I came across an off-market mixed-use property in Western Massachusetts and want to get others' thoughts on whether this would be a good first investment for buy and hold.
Some general information:
The property is 3 units, with the first-floor and basement unit being used as commercial and the second and third floors being residential. Overall, the property is in pretty good condition (albeit is located in a not-so-good part of town, but definitely getting better) and was built in 1950, with brick exterior.
Property Price: 325k
Rents: The property pulls in around 4.3k in rent each month. (1.7k for commercial and 1.3k each for the second and third units).
Square Footage: ~5.5k
Property Tax: 8.3k
Electricity: 1.6k (included in rents)
Water/Sewer: 1.6k (included in rents)
Insurance: ~2k (not sure about this)
General Repair + Vacancy: ~4.1k
As this is a mixed-use property, I would have to obtain a commercial loan at 25% down, most likely amortized over 20 years. Over time, I'd like to make improvements to the property such that utilities will be paid by the tenants.
I'm still very new to analyzing deals, especially commercial ones, and would appreciate any feedback or advice!
Just taking quick look at this.
Your insurance would be higher bc of the commercial aspect.
Your tax would increase upon purchase which is likely triggered by sale of property.
Budget 8-10% of management of area like this
Cap rate is too low for the C class property. You should be expecting close to 10% in any of these neighborhoods. Have your agent run comps of the area and what cap rate people are buying for.